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Instrument of Money market, Indian Financial system Video Lecture | Indian Financial System - B Com

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FAQs on Instrument of Money market, Indian Financial system Video Lecture - Indian Financial System - B Com

1. What are some common instruments of the money market in the Indian financial system?
Ans. Some common instruments of the money market in the Indian financial system include treasury bills, commercial papers, certificates of deposit, repurchase agreements, and call money.
2. What is the purpose of treasury bills in the money market?
Ans. Treasury bills are short-term debt instruments issued by the government to meet its financial requirements. They serve as a means of raising funds for the government and are considered safe investments with low risk.
3. What is the significance of commercial papers in the money market?
Ans. Commercial papers are unsecured promissory notes issued by corporations to raise short-term funds. They are an important instrument in the money market as they provide flexibility and liquidity to both issuers and investors.
4. How do certificates of deposit function in the money market?
Ans. Certificates of deposit (CDs) are time deposits issued by banks and financial institutions. They have a fixed maturity period and offer a higher interest rate compared to regular savings accounts. CDs provide a reliable investment option for individuals and institutions looking for low-risk investments in the money market.
5. What is the role of call money in the Indian financial system?
Ans. Call money refers to short-term funds borrowed or lent in the interbank market. It allows banks and financial institutions to manage their short-term liquidity requirements efficiently. Call money rates are the interest rates at which banks borrow and lend funds in the interbank market, influencing the overall interest rate structure in the economy.
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