ECONOMICS
FOREIGN CURRENCY MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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short term
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money
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low risk
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very liquid
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Detailed explanation-1: -Equity shares are long-term instruments and hence, cannot be a money market instrument.
Detailed explanation-2: -Hence, shares and bonds having maturity of more than one year are not considered as money market instrument.
Detailed explanation-3: -Short maturity period and high liquidity are two characteristic features of the instruments which are traded in the money market. Institutions like commercial banks, non-banking finance corporations (NBFCs) and acceptance houses are the components which make up the money market.
Detailed explanation-4: -Liquidity. They can be easily converted into cash where need be. Safety. Have very low default risk making them the safest investment. Rapid maturity. They are targeted to meet short term capital needs for a business or the government thus mature within a short period.