CA Foundation · Business Economics · Money Market
A bank has a temporary cash shortfall of ₹50 crore for one day and borrows it in the call money market at 6.00% per annum. Taking a 365-day year, the interest payable for that day is approximately:
Interest for one day is ₹50 crore × 6% × 1/365, which is about ₹8,21,918. The key step is dividing the annual interest of ₹3 crore by 365 days. Other figures arise from decimal errors or ignoring the one-day period.
- A₹3,00,000
- B₹8,219
- C₹8,21,918Correct
- D₹82,192
Explanation
Interest = 50,00,00,000 × 6/100 × 1/365 = 3,00,00,000/365 ≈ ₹8,21,918. Option A comes from forgetting to divide by 365 on a monthly basis, and option C results from a decimal slip by a factor of ten. Option B shifts the decimal by another place.
Did you get it right without looking?
One question tells you little. A timed set on Money Market shows your real accuracy, how long you take and where you lose marks.
More Money Market questions
- Which of the following is an instrument of the money market in India?
- In the RBI's classification of money supply, which of the following correctly defines M1 (narrow money)?
- In the liquidity trap case of the Keynesian money market, what does the money demand curve look like and what is the effect of increasing mo…
- Under the monetary policy framework in India, the policy repo rate is 6.50%. The Standing Deposit Facility (SDF) rate is set 25 basis points…
- Ramesh, a trader in Indore, keeps an extra amount of cash at home so that he can meet an unexpected hospital bill or a sudden repair of his …
- Which statement about Commercial Paper (CP) in India is correct?