The stock exchange is an example of the

1. Analyze the question The question asks which type of market the stock exchange belongs to. Think about what is traded there: shares (stocks) and bonds.

2. Explain the concept Financial markets are divided by the length of time the funds are lent or invested:

• Money market: deals in short-term funds (usually up to one year). Examples are treasury bills, commercial papers, and call money.
• Capital market: deals in medium- and long-term funds (more than one year). Examples are shares, stocks, bonds, and debentures. Companies and governments raise funds for expansion and projects here.
• Commodity market: where physical goods such as cocoa, groundnuts, and crude oil are bought and sold.
• Labour market: where workers (supply) and employers (demand) meet to determine employment and wages.

3. Solution

• The Nigerian Exchange (NGX, formerly the Nigerian Stock Exchange) trades shares, bonds, and other long-term securities.
• These instruments are used to raise long-term capital.
• So it is not the labour market (A), since no workers are hired there.
• It is not the money market (B), since that handles short-term instruments.
• It is not the commodity market (C), since physical goods are not traded there.
• It is therefore the capital market.

4. Answer The correct option is D. capital market.

5. Exam tip Remember: Stock Exchange = Securities = Long term = Capital market. Also remember "Money = Minor (short) time", which helps you separate the money market from the capital market. In JAMB, if you see "shares", "stocks", "bonds", or "debentures", think capital market straight away.