Read the following statements and mark the correct answer.
Assertion: Financial markets are classified on the basis of the maturity of financial instruments traded in them.
Reasoning: Instruments with a maturity of less than one year are traded in the money market. Instruments with longer maturity are traded in the capital market.
Answer & explanation
Correct answer: option 2
The correct option is: Option 2- Both Assertion (A) and reasoning (R) are correct, but R is not the correct explanation of A.
Assertion (A) states that financial markets are classified based on the maturity of financial instruments traded in them, which is correct.
Reasoning (R) provides additional information about the types of instruments traded in the money market and capital market based on their maturity, which is also correct.
However, the reasoning doesn't directly explain the assertion. It provides additional information related to the classification of financial markets but doesn't explain why financial markets are classified based on the maturity of financial instruments.