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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Securities Market Segments

Mr. Kapoor holds Rs 10 lakh in a debt instrument and wants to understand where it is traded. Which statement about the Indian money market is correct?

Treasury bills are issued by the RBI on behalf of the Government of India in 91, 182 and 364-day tenors. They are short-term discount instruments. The other statements are wrong: commercial paper is unsecured, certificates of deposit are bank instruments, and call money is overnight to fourteen days.

  1. ATreasury bills are issued by the RBI on behalf of the Government with maturities of 91, 182 and 364 daysCorrect
  2. BCommercial paper is a secured long-term instrument issued only by banks
  3. CCertificates of deposit are issued by corporates with maturity above 5 years
  4. DCall money market deals in instruments of maturity from 1 to 3 years

Explanation

Treasury bills are short-term government instruments issued at a discount in 91, 182 and 364-day tenors, with RBI conducting the auctions for the Government. Commercial paper is an unsecured short-term corporate instrument, not a secured long-term bank one. Certificates of deposit are issued by banks and financial institutions for short tenors. Call money deals in overnight to 14-day funds.

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