During the period of Diwali, people prefer to keep money at home and hence do not deposit money in the bank. There are also frequent withdrawals from the ATM in the form of cash. Due to this, banks all over the country may face the problem of low liquid cash. Identify the money market instrument that the bank can use to solve their financial problem.

Question

Option 1: Treasury Bill

Option 2: Commercial Paper

Option 3: Certificate of Deposit

Option 4: Commercial Bill

AfterBoards · Accepted Answer

The answer is 'Certificate of Deposit'. View full solution:

LIST I Financial Markets	LIST II Explanation
A. Capital Market	I. It facilitates transfer of investible funds from savers to entrepreneurs, seeking to establish new enterprise
B. Money Market	II. It consists of development banks, commercial banks and stock exchange and facilitate economic development
C. Primary Market	III. Market with low risk, unsecured instruments where assets are close substitutes for cash
D. Secondary Market	IV. It helps existing investors to disinvest and fresh investors to enter market

CUET Business Studies 2022 17 Aug Shift 1 PYQs

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