Question

Give the meaning of the following money market instruments:
(a) Treasury Bill
(b) Call Money​

Answer 1

Treasury Bill :-

treasury bill is an instrument of short term borrowing is issued by the Reserve Bank of India on behalf of Indian government.

They are also known as Zero Coupon Bonds. They are issued in the form of promissory note. they are highly liquid and are most secured bond. They are available for a minimum amount of ₹25,000 and its multiples.

It is issued at price less than face value and redeemed at par value on maturity.

Call Money :-

it is a short term finance repayable on demand, whose maturity period varies from 1 day to 15 days, used for inter-bank transactions.

It is used by banks to maintain CRR.

The interest rate paid on call money is called call rate.

There exists an inverse relationship between call rate and other short term money market instruments such as certificate of deposit and commercial paper. A rise in call rate makes other sources of finance cheaper and Bank raise fund from these sources

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Answer 2

HEY MATE HERE IS YOUR ANSWER ✍✍

➡️TREASURY BILL: Treasury bills, also known as "T-bills," are a security issued by the U.S. government. When you buy one, you are essentially lending money to the government. Here, the term security means any medium used for investment, such as bills, stocks or bonds.

➡️CALL MONEY: Call money is a short-term, interest-paying loan from one to 14 days made by a financial institution to another financial institution. ... The interest charged on a call loan between financial institutions is referred to as the call loan rate.

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