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      Question

      With reference to the Indian economy, consider the

      following statements : 1. ‘Commercial Paper’ is a short-term unsecured promissory note. 2. ‘Certificate of Deposit’ is a long-term instrument issued by the Reserve Bank of India to a corporation. 3. ‘Call Money’ is a short-term finance used for interbank transactions. 4. ‘Zero-Coupon Bonds’ are the interest bearing short term bonds issued by the Scheduled Commercial Banks to corporations. Which of the statements given above is/are correct
      A 1 and 2 only Correct Answer Incorrect Answer
      B 4 only Correct Answer Incorrect Answer
      C 1 and 3 only Correct Answer Incorrect Answer
      D 2, 3 and 4 only Correct Answer Incorrect Answer
      E 2 only Correct Answer Incorrect Answer

      Solution

      Certificate of deposit is a short term debt instrument. 2 is wrong since it says ‘long term instrument’. This eliminates the options a and d. Call money is a short-term finance for interbank transactions, so the option 3 is correct.

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