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Business Studies · 2026 · 3 marks
CBSE 2026 · Region 4 · Set 1 · Q24
(a) Differentiate between Capital Market and Money Market on the basis of: (i) Participants (ii) Liquidity (iii) Duration
(a)
Differentiate between Capital Market and Money Market on the
basis of :
(i)
Participants
(ii)
Liquidity
(iii)
Duration
OR
(b)
Explain how the following factors affect the requirements of fixed
capital of a company :
(i)
Nature of the business
(ii)
Technology upgradation
(iii)
Level of collaboration
Marking-scheme solution
Difference between Capital Market and Money Market:
| Basis | Capital Market | Money Market |
| (i) Participants | The participants in capital market are financial institutions, banks, corporate entities, foreign investors and ordinary retail investors from members of the public. | Participants in money market are, by and large, institutional participants such as the RBI, banks, financial institutions and finance companies; individual investors although permitted to transact in the secondary money market, do not normally do so. |
| (ii) Liquidity | Capital market securities are considered liquid investments because they are marketable on the stock exchanges. | Money market instruments enjoy a higher degree of liquidity as there is formal arrangement for this, for example, the Discount Finance House of India (DFHI) has been established for the specific objective of providing a ready market for money market instruments. |
| (iii) Duration | The capital market deals in medium and long term securities such as equity shares and debentures. | Money market instruments have a maximum tenure of one year, and may even be issued for a single day. |
Explain how the following factors affect the requirements of fixed
capital of a company :
(i)
Nature of the business
(ii)
Technology upgradation
(iii)
Level of collaboration
• (i) Nature of the business:
• The type of business has a bearing upon the fixed capital requirements.
A trading concern needs lower investment in fixed assets compared with
a manufacturing organisation, since it does not require to purchase plant
and machinery, etc.
• (ii) Technology upgradation:
Industries or organisations which use assets which are prone to
• obsolescence require higher fixed capital to purchase fixed assets.
This is so because replacement of fixed assets becomes due faster.
• (iii) Level of collaboration:
Certain business organisations share each other’s facilities when the
scale of operations of each one of them is not sufficient to make full use
• of the facility.
Such collaboration reduces the level of investment in fixed assets for
each one of the participating organisations.
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CBSE Class 12 Business Studies past-paper question from the 2026 board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.