ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -Equity shares are long-term instruments and hence, cannot be a money market instrument.

Detailed explanation-2: -The main money market instruments are Treasury bills, commercial papers, certificate of deposits, and call money.

Detailed explanation-3: -In reality, a bond is just one type of fixed income security. The difference between the money market and the bond market is that the money market specializes in very short-term debt securities (debt that matures in less than one year).

Detailed explanation-4: -Commercial paper, Treasury bills, and banker’s acceptances are debt instruments with maturities of 1 year or less and are therefore money market instruments. A newly issued Treasury note would have a maturity of 2 to 10 years and therefore would not be a money market instrument.

Detailed explanation-5: -Money market instruments include the following: Treasury bills, federal funds, repurchase agreements, certificates of deposit (CDs), commercial paper, and bankers’ acceptances (BAs). Each of these instruments has slightly different characteristics, and thus each has a slightly different interest rate.