ECONOMICS
FOREIGN CURRENCY MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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An agreement which the bank sells its valued papers to investor with an understanding to repurchase them at agreed price on a specified future date.
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A document which certifies that a certain sum of Ringgit has been deposited with a financial institution at a specified rate of interest with a specified maturity period.
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Bill of exchange which are drown on and accepted by commercial or merchant banks in Malaysia.
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Payable to order and entitle the holder the payment of a fixed deposit sum on maturity.
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Detailed explanation-1: -CPs can be issued by corporate, primary dealers (PDs), and all India financial institutions under the umbrella limit specified by the Reserve bank of India. CPs can be issued for maturities between 7 days and one year from the date of issue.
Detailed explanation-2: -Maturity of money market instruments is usually up to one year. At the same time, the maturity of capital markets instruments is longer. They don’t have a specific time frame.
Detailed explanation-3: -Limited Instruments: It is in fact a defect of the Indian money market. In our money market, the supply of various instruments such as the Treasury Bills, Commercial Bills, Certificate of Deposits, Commercial Papers, etc. is very limited.
Detailed explanation-4: -Money market generally includes short-term unsecured (uncollateralised) interbank loans, secured (collateralised) loans (including repurchase agreements), treasury bills (T-bills), commercial papers (CPs) and certificates of deposit (CDs).