Tag: participants in money market

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Questions Related to participants in money market

Multiple choice business organisation capital market money markets participants in money market types of markets

_______ are issued at a price which is lower than their face value and repaid at par.

  1. Commercial Paper

  2. Certificate of Deposit

  3. Commercial Bill

  4. Treasury Bill
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Treasury bill are issued at a price which is lower than their face value and repaid at par. A treasury bill is basically an instrument of short-term borrowing by the Government of India maturing in less than one year.  Treasury bills enable government to get short term borrowings as these bills are sold to banks and general public. Maturity of Treasury bills varies from 14 to 364 days.

Multiple choice business organisation capital market money markets participants in money market types of markets

Which of the following is true regarding call rate?

  1. A rise in call money rates makes other sources of finance cheaper.

  2. There is an inverse relationship between call rates and other short-term money market instruments.

  3. It is a highly volatile rate that varies from day-to-day and sometimes even from hour-to-hour.

  4. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
Call rate can be defined as the rate paid on call money. It is very volatile rate which varies from day to day and sometimes from hour to hour. Following statements are true regarding call rate:
a) A rise in call money rates makes other sources of finance cheaper.
b) There is an inverse relationship between call rates and other short-term money market instruments.
c) It is a highly volatile rate that varies from day-to-day and sometimes even from hour-to-hour.
Multiple choice business organisation capital market money markets participants in money market types of markets

Treasury bills are also known as Zero Coupon Bonds that are available for a minimum of ______  and in multiples thereof.

  1. 20000

  2. 25000

  3. 30000

  4. 35000
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Treasury bills are also known as Zero Coupon Bonds that are available for a minimum of and in multiples thereof. A treasury bill is basically an instrument of short-term borrowing by the Government of India maturing in less than one year.  Treasury bills enable government to get short term borrowings as these bills are sold to banks and general public. Maturity of Treasury bills varies from 14 to 364 days.

Multiple choice business organisation capital market money markets participants in money market types of markets

Which one of the following is not a money market instrument?

  1. Commercial paper

  2. Participatory certificates

  3. Warrants

  4. Treasury Bills
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Money market instruments are short-term debt securities with high liquidity and low risk, such as Treasury Bills and Commercial Paper. Warrants are long-term options that give the holder the right to buy stock, making them capital market instruments, not money market instruments.

Multiple choice business organisation capital market money markets participants in money market types of markets

Short-term borrowing is undertaken in.

  1. Money market

  2. Capital market

  3. Stock market

  4. Commodity market
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The money market is specifically designed for short-term borrowing and lending of funds, typically with maturities of one year or less. Capital, stock, and commodity markets are generally associated with longer-term investments or physical assets.

Multiple choice business organisation capital market money markets participants in money market types of markets

In the call/notice money market, which of the following participants is allowed to trade?

  1. All Banks, Primary Dealers and Mutual Funds

  2. All Corporates

  3. Only Commercial Banks

  4. All of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The call/notice money market is a segment of the money market where banks and primary dealers borrow and lend funds for very short periods. While regulations have evolved, traditionally and in most standard academic contexts, this market is restricted to commercial banks and primary dealers.

Multiple choice business organisation capital market money markets participants in money market types of markets

A commercial bill is used to _____________.

  1. Pay the interest

  2. Meet the short term debt

  3. Finance the working capital requirements

  4. Meet the long term debt
Reveal answer Fill a bubble to check yourself
A,C Correct answer
Explanation

Working capital financing is done by various modes such as trade credit, cash and discount of bills, bank guarantee, letter of credit, factoring, commercial paper, working capital financing extensively used by all small and big businesses.

Multiple choice business organisation capital market money markets participants in money market types of markets

Only institutional investors can participate in __________.

  1. Foreign market

  2. Loan market

  3. Capital market

  4. Money market
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Only institutional investors can participate in money market. The money market consists of financial institutions and dealers in money or credit who wish to either borrow or lend. Participants borrow and lend for short periods, typically up to twelve months.

Multiple choice business organisation capital market money markets participants in money market types of markets

Money market deals in _____________________.

  1. Short term Securities

  2. Medium term securities

  3. Long term Securities

  4. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The money market is where financial instruments with high liquidity and very short maturities are traded. It is used by participants as a means for borrowing and lending in the short term, with maturities that usually range from overnight to just under a year.