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      Question

      Which of the following is a discount instrument in the

      Indian money market?
      A Certificate of Deposit (CD) Correct Answer Incorrect Answer
      B Commercial Paper (CP) Correct Answer Incorrect Answer
      C Treasury Bill (T-Bill) Correct Answer Incorrect Answer
      D Both (b) and (c) Correct Answer Incorrect Answer
      E All of the above Correct Answer Incorrect Answer

      Solution

      All three instruments—Certificates of Deposit (CDs), Commercial Paper (CP), and Treasury Bills (T-Bills)—are typically issued at a discount to their face value and redeemed at face value at maturity. The difference constitutes the interest earned by the investor.

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