CSEET · Economic and Business Environment · Indian Financial Markets
In the Indian money market, which of the following instruments is issued by a scheduled commercial bank to raise short-term funds from the market in the form of a negotiable instrument and carries a fixed maturity?
A Certificate of Deposit is the correct answer. It is a negotiable money market instrument issued by banks against deposited funds for a fixed short maturity. Equity shares and ten-year debentures are long-term capital market securities, and treasury stock option is not a money market instrument.
- ACertificate of DepositCorrect
- BEquity share
- CDebenture with 10-year maturity
- DTreasury Stock Option
Explanation
A Certificate of Deposit is a negotiable, usance-based money market instrument issued by banks (and certain eligible financial institutions) against funds deposited, for a fixed short period. Equity shares and long-dated debentures belong to the capital market, so they are not money market instruments.
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