The dynamics of stability and collapse of a trapped atomic Bose-Einstein condensate (BEC) coupled to a molecular one is studied using the time-dependent Gross-Pitaevskii (GP) equation including a nonlinear interaction term which can transform two atoms into a molecule and vice versa. We find interesting oscillation of the number of atoms and molecules for a BEC of fixed mass. This oscillation is a consequence of continuous transformation in the condensate of two atoms into a molecule and vice versa. For the study of collapse an absorptive contact interaction and an imaginary quartic three-body recombination term are included in the GP equation. It is possible to have a collapse of one or both components when one or more of the nonlinear terms in the GP equation are attractive in nature, respectively.