Q.Name and briefly explain any four money market instruments.

The money market's main instruments include Treasury Bills, Commercial Paper, Certificates of Deposit, Call Money and Commercial Bills — any four of these fully answer this question.

Any four of the five instruments covered in this chapter would be accepted; four representative ones are given below.

The money market functions through several defined short-term instruments, of which any four fully answer this question:

1. Treasury Bill — issued by the Government of India at a discount to face value, redeemed at face value, for standard maturities of 91/182/364 days; carries a sovereign guarantee.
2. Commercial Paper — an unsecured, short-term promissory note issued at a discount by large, highly rated companies to meet working-capital needs.
3. Certificate of Deposit — a negotiable, interest-bearing instrument issued by a bank/financial institution against a fixed deposit of money for a specified period.
4. Call Money — extremely short-term, repayable-on-demand borrowing and lending between banks to meet reserve/liquidity shortfalls.
5. Commercial Bill — a negotiable instrument drawn by a seller on a buyer arising from a genuine credit sale of goods, which the seller can get discounted with a bank before its due date.