ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The call money funds can move swiftly among broking firms and lenders. Hence, the call money funds are one of the most liquid assets appearing in the balance sheet of brokerage companies. If the bank which has lent the money calls the funds, then the broking firm may go onto issue margin calls.

Detailed explanation-2: -’Call Money’ is the borrowing or lending of funds for 1day. Where money is borrowed or lend for period between 2 days and 14 days it is known as ‘Notice Money’. And ‘Term Money’ refers to borrowing/lending of funds for period exceeding 14 days.

Detailed explanation-3: -Call money is a very short-term bank loan that does not contain regular principal and interest payments. It is often used by brokerage firms to finance margin accounts. Call money does not have to follow a fixed schedule, nor does the lender have to provide any notice of repayment. Was this answer helpful? 0.

Detailed explanation-4: -Example of the Call Money Rate 2 Broker ABC is looking to purchase 1, 000 shares of Apple Inc. for a large client that’s looking to buy the shares on margin. The client will pay the broker in full within 30 days. The broker will then borrow the needed money from a bank so that the client can buy shares now.

Detailed explanation-5: -The call money market is the most liquid of all short-term money market segments, with a maturity period of one day. The tenure of call money loan ranges from one day to fourteen days after the disbursement of the amount is made by the lending institution.