Which of the following pairs consists only of money market instruments?
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Participation certificates and certificates of deposit
Option (1) Treasury bills and debentures — Incorrect. Treasury bills belong to the money market, but debentures are a capital market instrument.
Option (2) Commercial paper and preference shares — Incorrect. Commercial paper is a money market instrument, but preference shares belong to the capital market.
Option (3) Participation certificates and certificates of deposit — Correct. Both are money market instruments. The money market deals in assets with a maturity of less than one year.
Option (4) Call money and equity shares — Incorrect. Call money is a money market instrument, but equity shares belong to the capital market.
NCERT (Pre-rationalised Edition): “(ii) Instruments: The main instruments traded in the capital market are – equity shares, debentures, bonds, preference shares etc. The main instruments traded in the money market are short term debt instruments such as T-bills, trade bills reports, commercial paper and certificates of deposit.”
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