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What type of instruments are traded in a Money Market?
  • a)
    Treasury bills
  • b)
    Commercial bills
  • c)
    Call money
  • d)
    All of these
Correct answer is option 'D'. Can you explain this answer?
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Most Upvoted Answer
What type of instruments are traded in a Money Market?a)Treasury bills...
Money market is a market for short term instruments. Since all the given options are short time instruments, option d is the right answer.
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What type of instruments are traded in a Money Market?a)Treasury bills...
The instruments traded in a Money Market are:
1. Treasury bills: These are short-term securities issued by the government to raise funds for short-term expenses. They have a maturity period of less than one year and are considered one of the safest investments in the money market.
2. Commercial bills: Also known as commercial papers, these are unsecured promissory notes issued by corporations to finance their short-term cash needs. They have a maturity period of less than one year and are typically bought by institutional investors.
3. Call money: This refers to short-term funds borrowed or lent in the money market for a period of one day. Call money transactions are typically made between banks and financial institutions to manage their short-term liquidity needs.
Therefore, the correct answer is D: All of these.
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Direction: Read the following text and answer the questions given below:“Usually, money market funds are recommended to investors with an investment horizon of 90- 365 days. These schemes can help you diversify your portfolio and help invest surplus cash while maintaining liquidity. It is a good option for retail investors with smaller investment amounts. Ensure that you invest according to your investment plan.”After reading this article in a magazine, Ramesh who needs funds for his venture decided to buy a financial asset from the RBI. This financial asset is an instrument of short-term borrowing. He decided to buy it because he doesn’t want to take risk and wants an assured return. This instrument is a promissory note. It is highly liquid. This instrument is also known as Zero Coupon Bond. On this instrument is written T-91. Investment in this instrument started with just ₹ 25,000. For a higher value it is given in the multiples of ₹ 25,000.Q. Which financial asset is indicated in the above case?

Direction: Read the following text and answer the questions given below:Rajesh is the CEO of a leading petrochemical company. Recently, the company issued share capital to cover some expenses. However, in order to meet the floating cost of issuing shares, the company decided to conduct Bridge Financing. Therefore, it decided to issue a money market tool. The CEO’s decision wisely met the company’s requirements. Three months later, the company decided to issue new shares in the primary market again. According to the floating method it involves, it decided to adopt the method mainly adopted by listed companies and attract the masses by directly contacting the public. Again, success came from the company’s approach and the realization of its goals. However, when the company tried the same type again three months later, the company encountered many problems. The problem is to determine a key aspect related to the security of the new release. If the same process is carried out in the secondary market, the company will not care too much about this key aspect.Q. Which type of money market instrument was issued by the company in the earlier part?

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What type of instruments are traded in a Money Market?a)Treasury billsb)Commercial billsc)Call moneyd)All of theseCorrect answer is option 'D'. Can you explain this answer?
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