With reference to the Indian Economy, consider the following statements:
1. Commercial Paper is a short term u

Question

With reference to the Indian Economy, consider the following statements:
1. Commercial Paper is a short term unsecured promissory note.
2. Certificate of Deposit is a long-term instrument issued by the Reserve Bank of India to a corporation.
3. Call Money is a short-term finance used for interbank transactions.
4. Zero-Coupon Bonds are the interest-bearing short-term bonds issued by the Scheduled Commercial Banks to corporations.
Which of the statements given above is/are correct?

Accepted Answer

Commercial Paper (CP) is an unsecured, negotiable money market instrument issued by corporations as a short-term financing option. Call money is a critical component of the interbank market, facilitating the management of short-term liquidity needs among banks. Certificates of Deposit (CDs) are negotiable money market instruments issued by banks to mobilize funds, typically with maturities ranging from 15 days to one year, and are not issued by the RBI to corporations. Zero-Coupon Bonds do not bear interest; instead, they are sold at a discount to their face value and the difference represents the interest earned upon maturity.