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CA Intermediate · Financial Management and Strategic Management · Treasury and Cash Management

Which of the following is a money market instrument commonly used by a corporate treasurer to park short-term surplus cash for a period of up to 91 days, issued by the Government of India at a discount and redeemed at face value?

The instrument is a Treasury bill. It is a short-term government money market security issued at a discount to face value and redeemed at par, with 91-day, 182-day and 364-day maturities, making it suitable for parking surplus cash.

  1. ATreasury billCorrect
  2. BDebenture
  3. CEquity share
  4. DPreference share

Explanation

Treasury bills are short-term government securities issued at a discount and redeemed at par, with maturities of 91, 182 or 364 days. Debentures and shares are long-term capital market instruments.

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