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Money Market chapter #6 | Banking Awareness | T Bills ; Certificate of deposit ;Call Money with MCQ Video Lecture | Banking Awareness for IBPS/SBI/LIC/Insurance exams (Hindi) - Banking Exams

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FAQs on Money Market chapter #6 - Banking Awareness - T Bills ; Certificate of deposit ;Call Money with MCQ Video Lecture - Banking Awareness for IBPS/SBI/LIC/Insurance exams (Hindi) - Banking Exams

1. What is a money market?
Ans. A money market is a segment of the financial market where short-term borrowing and lending of funds take place. It deals with highly liquid and low-risk instruments such as Treasury Bills, Certificates of Deposit, and Call Money.
2. What are Treasury Bills (T-Bills)?
Ans. Treasury Bills, also known as T-Bills, are short-term debt instruments issued by the government to raise funds. They have a maturity period of less than one year and are considered to be one of the safest investments. T-Bills are usually sold at a discount from their face value and the investors earn the difference as interest.
3. What is a Certificate of Deposit (CD)?
Ans. A Certificate of Deposit (CD) is a financial instrument offered by banks and financial institutions where individuals can deposit a specific amount of money for a fixed period of time. The deposited amount earns a higher interest rate compared to regular savings accounts. CDs have a fixed maturity date and withdrawing funds before that date may incur penalties.
4. What is Call Money?
Ans. Call Money refers to short-term funds borrowed or lent in the interbank market for a period of one day. It is an unsecured loan where banks and financial institutions lend money to each other to meet their short-term liquidity requirements. The interest rate for call money is relatively higher compared to other money market instruments.
5. What are the benefits of investing in money market instruments?
Ans. Investing in money market instruments offers several benefits, such as low risk, high liquidity, and stable returns. These instruments provide a safe haven for investors looking to park their funds for a short duration. They also offer better returns compared to traditional savings accounts and are widely used for short-term cash management by individuals, corporations, and financial institutions.
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