ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Commercial bills, also a money market instrument, works more like the bill of exchange. Businesses issue them to meet their short-term money requirements.

Detailed explanation-2: -Banks often use the interbank call money market to meet reserve requirements. Other entities use short term loans from the interbank call money market to manage various liquidity needs. Loans in the interbank call money market are typically transacted based on the London Interbank Offer Rate (LIBOR).

Detailed explanation-3: -The Money Market Instruments help to provide short-term funds to the private and public institutions who need finance for their working capital requirements. These funds are provided by discounting the trade bills through commercial banks, brokers, discount houses, and acceptance houses.

Detailed explanation-4: -Treasury Bills These are only issued by the central government of a country when it requires funds to meet its short-term obligations.

Detailed explanation-5: -What Are Some Examples of Money Market Instruments? The money market is composed of several types of securities including short-term Treasuries (e.g. T-bills), certificates of deposit (CDs), commercial paper, repurchase agreements (repos), and money market mutual funds that invest in these instruments.