Comprehension

Mr. Rehan has done a diploma in Financial market and its participants. Recently he got a chance to present his knowledge and train students in a school. He told students about various money market instruments. He mentioned about an instrument which is issued by R.B.I on behalf of Central Government. He told students that Banks use a system to borrow money (an instrument) to manage their CRR ie Cash Reserve Ratio. Later, he mentioned a short term self liquidating instrument like Bills of Exchange that can be used for arranging working capital. He also told students about an instrument that helps to mobilise large amounts of money in short period by commercial banks. Lastly, Mr. Rehan spoke about an instrument that works as a replacement towards bank borrowing for large credit-worthy companies, its maturity period is 15 days to one year.

Question: 1

"He mentioned about an Instrument which is issued by RBI on behalf of Central Government".
Identify the Money instrument to which the above given line is related to

Updated On: Apr 19, 2024
  • Call money
  • Commercial Papers
  • Treasury Bills
  • Commercial Bills
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The Correct Option is C

Solution and Explanation

The correct option is (C): Treasury Bills
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Question: 2

He told that Banks use a system to borrow money (an instrument) to manage their cash Reserve Ratio.
Which security amongst money market Instrument is mentioned here

Updated On: Apr 19, 2024
  • Call money
  • Commercial Papers
  • Treasury Bills
  • Commercial Bills
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The Correct Option is A

Solution and Explanation

The correct option is (A): Call money
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Question: 3

"A short term self liquidating like Bills of Exchange than can be used for arranging working capital".
Which Money Market instrument, was Mr. Rehan referring to?

Updated On: Apr 19, 2024
  • Call money
  • Certificate of Deposit
  • Commercial Bills
  • Commercial Papers
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The Correct Option is C

Solution and Explanation

The correct option is (C): Commercial Bills
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Question: 4

"An instrument that helps to mobilise large amounts of money in short period by commercial banks".
Identify the money market instrument stated above:

Updated On: Apr 19, 2024
  • Certificate of Deposit
  • Call money
  • Commercial Bills
  • Treasury Bills
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The Correct Option is A

Solution and Explanation

The correct option is (A): Certificate of Deposit
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Question: 5

"An instrument that works as a replacement towards bank borrowing for large Credit-worthy companies, its maturity period is 15 days to one year".
Identify the money market instrument stated in the above lines.

Updated On: Apr 19, 2024
  • Call money
  • Commercial Papers
  • Commercial Bills
  • Certificate of Deposit
Hide Solution
collegedunia
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The Correct Option is B

Solution and Explanation

The correct option is (B): Commercial Papers
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