Mr. Rehan has done a diploma in Financial market and its participants. Recently he got a chance to present his knowledge and train students in a school. He told students about various money market instruments. He mentioned about an instrument which is issued by R.B.I on behalf of Central Government. He told students that Banks use a system to borrow money (an instrument) to manage their CRR i.e Cash Reserve Ratio. Later. he mentioned a short term self liquidating instrument like Bills of Exchange that can be used for arranging working capital. He also told students about an instrument that helps to mobilise large amounts of money in short period by commercial banks. Lastly, Mr. Rehan spoke about an instrument that works as a replacement towards bank borrowing for large credit-worthy companies, its maturity period is 15 days to one year.

"A short self liquidating Bills of Exchange than can be used for arranging working capital".

Which Money Market instrument, was Mr. Rehan referring to ?

Commercial bills

The correct answer is option (3) : Commercial bills

The correct answer is option 3 : Commercial bills.

As mentioned in the given statement, Mr. Rehan was referring to a short-term self-liquidating instrument like Bills of Exchange that can be used for arranging working capital.

Bills of Exchange are a type of commercial bill that is used for short-term financing and is self-liquidating in nature.

Therefore, the correct answer is option 3: Commercial bills.

1. Call money: Call money is a type of money market instrument where funds are borrowed or lent on a daily basis between banks and other financial institutions. It is used for short-term financing and is usually unsecured. The interest rate on call money is determined by market rate on call money is determined by market forces and can fluctuate frequently.

2 Certificate of Deposit (CD): Certificate of Deposit is a type of money market instrument issued by banks and financial institutions to raise short-term funds. It is a time deposit that cannot be withdrawn before maturity and pays a fixed rate of interest. CDs are usually issued in denominations of Rs. 1 lakh or more and have a maturity period ranging from 7 days to 1 year.

4. Commercial papers: Commercial papers are a type of money market instrument issued by companies to raise short-term funds. They are unsecured promissory notes that are issued at a discount to face value and have a maturity period ranging from 7 days to 1 year. Commercial papers are usually issued in denominations of Rs. 5 lakh or more and are rated by credit rating agencies.