Which of the following is an instrument of money market?

(A) Call money
(B) Certificate of deposit
(C) Shares
(D) Debentures
(E) Commercial Paper

Choose the correct answer from the options given below.

(A), (B) and (E) Only

The correct answer is option 1- (A), (B) and (E) Only.

Call money, Certificate of deposit and Commercial Paper are an instrument of money market.

Shares and debentures are instrument of capital market.

* Call Money: Call money is short-term finance repayable on demand, with a maturity period of one day to fifteen days, used for inter-bank transactions. Call money is a method by which banks borrow from each other to be able to maintain the cash reserve ratio.

* Commercial Paper: Commercial paper is a short-term unsecured promissory note, negotiable and transferable by endorsement and delivery with a fixed maturity period. It is issued by large and creditworthy companies to raise short-term funds at lower rates of interest than market rates.

* Certificate of Deposit: Certificates of deposit (CD) are unsecured, negotiable, short-term instruments in bearer form, issued by commercial banks and development financial institutions. They can be issued to individuals, corporations and companies during periods of tight liquidity when the deposit growth of banks is slow but the demand for credit is high. They help to mobilise a large amount of money for short periods.