Match each money market instrument on the left with its corresponding operational definition on the right.
- Treasury BillsShort-term debt securities issued by the Central Bank on behalf of the government to raise short-term funds.
- Commercial PapersUnsecured short-term promissory notes issued by creditworthy corporations to finance working capital needs.
- Call MoneyExtremely short-term interbank loans payable on demand, often used by commercial banks to balance daily liquidity.
- Certificate of DepositNegotiable receipts issued by commercial banks acknowledging a fixed-term deposit at a specified interest rate.
Answer
Treasury Bills match short-term government borrowing issued by the Central Bank; Commercial Papers match unsecured corporate promissory notes; Call Money matches interbank overnight/demand loans; Certificate of Deposit matches negotiable bank receipts for fixed deposits.
Each instrument matches its primary function: Treasury Bills represent short-term government debt issued via the central bank, Commercial Papers represent unsecured corporate promissory notes, Call Money represents interbank short-notice liquidity loans, and Certificates of Deposit represent negotiable bank deposit receipts.
Step-by-Step Solution
Key Concept
Money Market Instruments and Operations
Estimated Time:1m 0s