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      Question

      Which of the following are money market instruments?I.

      Treasury billsII. Certificate deposits
      A Only I Correct Answer Incorrect Answer
      B Only II Correct Answer Incorrect Answer
      C Both I and II Correct Answer Incorrect Answer
      D Neither I nor II Correct Answer Incorrect Answer

      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.

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