With reference to money markets consider the following statements Call money refers to borrowing len...........

Finance Financial Markets

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With reference to money markets, consider the following statements:

Call money refers to borrowing/lending of funds on overnight basis.

Notice money refers to borrowing/lending of funds for a period exceeding 14 days

Which of the statements given above is/are correct

1 only

2 only

Both 1 and 2

Neither 1 and 2

Explanation:

Under call money market, funds are transacted on an overnight basis and under notice money market, funds are transacted for a period between 2 days and 14 days. The money market primarily facilitates lending and borrowing of funds between banks and entities like Primary Dealers (PDs).

If money is borrowed or lend for period between 2 days and 14 days it is known as Notice Money. Term Money refers to borrowing/lending of funds for period between 15 days and one year.