Q.What are the different components of money market ?

The money market is the market where short-term funds (up to one year) are borrowed and lent. Its main components or instruments are treasury bills, commercial paper, certificates of deposit, call/notice money and commercial (trade) bills. ## Meaning The money market is the segment of the financial market that deals in short-term funds, i.e. funds required for periods of up to one year. The participants are the Reserve Bank of India, commercial banks, companies and financial institutions. It is a market for near-money assets that are highly liquid and safe. It is studied in the AP Intermediate 2nd-year Commerce Financial Markets chapter (aligned with the NCERT/CBSE commerce curriculum). ## Components / Instruments of the Money Market 1. Treasury Bills (T-Bills) — Short-term borrowing instruments of the Government of India, issued by the RBI for 91, 182 or 364 days. They are issued at a discount and redeemed at face value; they are risk-free (zero-coupon) instruments. 2. Commercial Paper (CP) — An unsecured promissory note issued by large, creditworthy companies to raise short-term funds, usually for 15 days to one year. It is issued at a discount to face value. 3. Certificate of Deposit (CD) — A negotiable instrument issued by commercial banks and financial institutions against money deposited with them for a fixed short period, normally when banks need funds quickly. 4. Call Money / Notice Money — Very short-term funds lent and borrowed, mainly between banks, for one day (call money) or up to 14 days (notice money). It is used by banks to meet their reserve requirements; the rate is the call rate. 5. Commercial Bill (Trade Bill) — A bill of exchange drawn by a seller on a buyer for goods sold on credit; it can be discounted with a bank before maturity to obtain immediate funds. It is used to finance trade. These five instruments together make up the money market and provide short-term liquidity to the economy — the content th …