Match the following: 1. Repo rate A. The rate of interest payable by…

Match the following:

1.	Repo rate	A.	The rate of interest payable by commercial banks to RBI if they borrow money from the latter in case of a shortage of reserves.
2.	Reverse repo rate	B.	When the central bank buys the security, this agreement of purchase also has specification about date and price of resale of this security.
3.	Open market operations	C.	When the central bank may sell the securities through an agreement which has a specification about the date and price at which it will be repurchased.
4.	Bank rate	D.	The sale and purchase of government securities in open by the Central Bank

Answer & explanation

Correct answer: option 4

The correct answer is Option 4: 1-B, 2-C, 3-D, 4-A

1.	Repo rate	B. When the central bank buys the security, this agreement of purchase also has specification about date and price of resale of this security.
2.	Reverse repo rate	C. When the central bank may sell the securities through an agreement which has a specification about the date and price at which it will be repurchased.
3.	Open market operations	D. The sale and purchase of government securities in open by the Central Bank
4.	Bank rate	A. The rate of interest payable by commercial banks to RBI if they borrow money from the latter in case of a shortage of reserves.

Repo rate: When the central bank buys the security, this agreement of purchase also has specification about date and price of resale of this security.

Reverse repo rate: When the central bank may sell the securities through an agreement which has a specification about the date and price at which it will be repurchased.

Open market operations: The sale and purchase of government securities in open by the Central Bank

Bank rate: The rate of interest payable by commercial banks to RBI if they borrow money from the latter in case of a shortage of reserves.