Which of the following are money market instruments?
I. Treasury bills
II. Certificate deposits

Solution

Both Treasury bills and Certificates of Deposit are money market instruments, which are short-term financial instruments with maturities typically less than one year. Treasury bills are short-term government securities issued by the Reserve Bank of India on behalf of the Government of India, typically with maturities of 91-364 days. They are issued at a discount and redeemed at face value. Certificates of Deposit are time deposits issued by banks and financial institutions with fixed interest rates, usually with terms ranging from 7 days to 1 year. Both instruments are highly liquid, considered relatively safe, and play crucial roles in maintaining financial system liquidity.