ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Description: Money market consists of negotiable instruments such as treasury bills, commercial papers. and certificates of deposit. It is used by many participants, including companies, to raise funds by selling commercial papers in the market.

Detailed explanation-2: -Commercial papers are often issued by corporates or entities that have a high credit rating to meet their short-term requirements like funding a new project or meeting their short-term working capital requirements. The eligible entities that can issue commercial papers as per the guidelines of RBI are, Companies. NBFCs.

Detailed explanation-3: -Commercial paper refers to a short-term, unsecured debt obligation that is issued by financial institutions and large corporations as an alternative to costlier methods of funding. It is a money market instrument that generally comes with a maturity of up to 270 days.

Detailed explanation-4: -What Is Commercial Paper? Commercial paper is an unsecured, short-term debt instrument issued by corporations. It’s typically used to finance short-term liabilities such as payroll, accounts payable, and inventories. Commercial paper is usually issued at a discount from face value.

Detailed explanation-5: -The investors in commercial paper are usually money market mutual funds, which invest in short-term debt securities. Commercial paper can be good for investors, as it often yields a greater return than government-backed debt securities such as Treasury bonds and Treasury bills.