Match each money market instrument on the left with its primary issuing institution or operational mechanism on the right.
- Treasury BillsShort-term debt instruments issued by the Central Bank on behalf of the government to raise short-term funds.
- Certificate of DepositNegotiable short-term receipts issued by commercial banks acknowledging a specified sum deposited for a fixed period.
- Bankers' AcceptanceTime drafts drawn on and accepted by a commercial bank to guarantee payment in international trade operations.
- Commercial PaperUnsecured short-term promissory notes issued by creditworthy corporate bodies to meet immediate working capital needs.
Answer
Treasury Bills match short-term debt instruments issued by the Central Bank on behalf of the government; Certificate of Deposit matches negotiable short-term receipts issued by commercial banks acknowledging a specified sum deposited; Bankers' Acceptance matches time drafts drawn on and accepted by a commercial bank to guarantee trade payment; Commercial Paper matches unsecured short-term promissory notes issued by creditworthy corporate bodies.
Treasury Bills represent government short-term debt issued by central banks; Certificates of Deposit are bank-issued interest-bearing deposit documents; Bankers' Acceptances provide commercial bank guarantees on international trade bills; Commercial Papers are short-term debt notes issued by financially solid corporations.
Step-by-Step Solution
Key Concept
Distinction and operations of money market instruments