Match each money market instrument listed on the left with its defining operational characteristic or primary issuing entity on the right.
- Commercial PaperUnsecured short-term promissory notes issued directly by large, creditworthy corporations to meet immediate working capital needs.
- Treasury BillsShort-term debt securities issued by the Central Bank on behalf of the government to raise short-term funds.
- Call MoneyUltra-short-term interbank funds borrowed or lent by commercial banks to balance daily liquidity reserves on demand.
- Certificate of DepositNegotiable receipts issued by commercial banks confirming a fixed money deposit for a specified term at a given interest rate.
Answer
Commercial Paper matches with unsecured corporate promissory notes; Treasury Bills match with government debt securities issued by the Central Bank; Call Money matches with interbank loans for daily liquidity; and Certificate of Deposit matches with negotiable bank deposit receipts.
Each money market instrument serves a distinct role: Commercial Paper provides corporate short-term borrowing, Treasury Bills provide short-term government funding via the Central Bank, Call Money facilitates immediate interbank reserve balance adjustments, and Certificates of Deposit serve as negotiable receipts for fixed bank deposits.
Step-by-Step Solution
Key Concept
Money Market Instruments and Their Operational Characteristics