The following is not a Money Market Instrument:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Call for Deposit
Option (1) Commercial paper — A money market instrument (Incorrect). It is a short-term unsecured promissory note issued by large and creditworthy companies, for 15 days to one year.
Option (2) Certificate of Deposit — A money market instrument (Incorrect). It is an unsecured, negotiable short-term instrument in bearer form, issued by commercial banks and development financial institutions.
Option (3) Commercial Bill — A money market instrument (Incorrect). It is a bill of exchange used to finance the working capital of firms, and it can be discounted with a bank.
Option (4) Call for Deposit — Not a money market instrument (Correct). The money market deals in short-term funds repayable within a year, through Treasury Bill, Commercial Paper, Call Money, Certificate of Deposit and Commercial Bill. No instrument of this name exists. The real one is Call Money: finance repayable on demand, for one to fifteen days, used for borrowing between banks.
Note: Although the chapter ‘Financial Markets’ was dropped from the NCERT textbooks during rationalisation, it has stayed in the NTA syllabus every year since 2022, except for 2025, and it is part of the syllabus again from 2026. This question is therefore based on the pre-rationalised NCERT, an extract from which is given below. NCERT (Pre-rationalised Edition): “MONEY MARKET The money market is a market for short term funds which deals in monetary assets whose period of maturity is upto one year. These assets are close substitutes for money. It is a market where low risk, unsecured and short term debt instruments that are highly liquid are issued and actively traded everyday. …” “…The instruments of money market includes treasury bills, commercial paper, call money, Certificate of deposit, commercial bills, participation certificates and money market mutual funds. …” |