Yield on ..... are typically higher than government securities. These flexible instruments help issuers to meet their short-term funding needs in that the issuers may roll over the debt by issuing new papers to redeem outstanding ones.

FOREIGN CURRENCY MARKETS

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Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]

Yield on ____ are typically higher than government securities. These flexible instruments help issuers to meet their short-term funding needs in that the issuers may roll over the debt by issuing new papers to redeem outstanding ones.

A	Negotiable Certificate of Deposit
B	Repurchase Agreement
C	Commercial Paper
D	Treasury Bills

Explanation:

Detailed explanation-1: -A treasury bill (T Bill) is a short term government debt obligation. The Reserve Bank of India issues it. It has a maturity of one year or less. Hence, these are short term instruments.

Detailed explanation-2: -For the short term Money markets include markets for such instruments as bank accounts, including term certificates of deposit; interbank loans (loans between banks); money market mutual funds; commercial paper; Treasury bills; and securities lending and repurchase agreements (repos).

Detailed explanation-3: -Treasury Bills (T-Bills) Issued by the Central Government, Treasury Bills are known to be one of the safest money market instruments available. However, treasury bills carry zero risk.

Detailed explanation-4: -Commercial paper is an unsecured form of promissory note that pays a fixed rate of interest. It is typically issued by large banks or corporations to cover short-term receivables and meet short-term financial obligations, such as funding for a new project.

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ECONOMICS (CBSE/UGC NET)

ECONOMICS

FOREIGN CURRENCY MARKETS