ECONOMICS
FOREIGN CURRENCY MARKETS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Commercial Paper
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Banker’s Acceptance
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Repurchase Agreement
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Factoring
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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. It is highly liquid as it has instruments that have a maturity below one year.
Detailed explanation-3: -Detailed Solution. Gold is not considered fiat money. Fiat money is the currency issued by the government which is not backed by any physical commodity such as silver or gold. Paper currency, coins, and demand drafts are fiat money.
Detailed explanation-4: -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.
Detailed explanation-5: -Money market instruments include Bills of Exchange or Commercial Bills, Treasury Bills (T-Bills), Commercial Papers (CP), Certificate of Deposits (CD), Repurchase Agreements, Banker’s Acceptance and Call & Notice Money. Capital market instruments include bonds and stocks.