Match each money market participant or instrument with its defining operational function.
- Treasury BillsShort-term debt instruments issued by government monetary authorities to finance public expenditure deficits.
- Commercial PapersUnsecured short-term promissory notes issued by reputable corporate firms to raise working capital.
- Certificates of DepositNegotiable receipts issued by commercial banks certifying a specified sum deposited for a fixed period.
- Discount HousesSpecialized financial intermediaries that promote liquidity by purchasing and discounting short-term commercial bills.
Answer
Treasury Bills match with government short-term debt instruments; Commercial Papers match with unsecured short-term corporate promissory notes; Certificates of Deposit match with negotiable bank deposit receipts; Discount Houses match with specialized intermediaries that discount short-term bills.
Each money market entity fulfills a specific short-term credit or liquidity function: Treasury Bills represent government short-term debt, Commercial Papers represent short-term corporate debt, Certificates of Deposit represent negotiable bank deposit receipts, and Discount Houses provide specialized rediscounting services.
Step-by-Step Solution
Key Concept
Money Market Instruments and Institutions