ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -A treasury bill (T Bill) is a short term government debt obligation. The Reserve Bank of India issues it. It has a maturity of one year or less.

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’.

Detailed explanation-3: -Call money is any type of short-term, interest-earning financial loan that the borrower has to pay back immediately whenever the lender demands it. Call money allows banks to earn interest, known as the call loan rate, on their surplus funds. Call money is typically used by brokerage firms for short-term funding needs.

Detailed explanation-4: -Money market instruments are short-term financing instruments which can be converted easily to cash. Interbank loans (loans between banks), money market mutual funds, commercial paper, Treasury bills and securities lending and repurchase agreements, are all examples of money markets instruments.

Detailed explanation-5: -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.