Multiple Choice Questions on With reference to the Indian economy consider the following statements lsquo Commercial Paper rsquo ........... for General Knowledge ( All Exams) Preparation

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Multiple Choice Questions

With reference to the Indian economy consider the following statements lsquo Commercial Paper rsquo ...........

Economic and Social Issues Nature of Indian economy
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    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?

    1 and 2 only

    Incorrect Answer

    4 only

    Incorrect Answer

    1 and 3 only

    Correct Answer

    2, 3 and 4 only

    Incorrect Answer
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    Explanation:
    • Statement 1 is correct: Commercial paper, in the global financial market, is an unsecured promissory note with a fixed maturity.
    • Statement 2 is incorrect: Regulated by the Reserve Bank of India, a Certificate of Deposit is a type of money market instrument issued against the funds deposited by an investor with a bank in a dematerialized form for a specific period of time. CDs can only be issued to individuals, companies, fund houses, and such.
    • Statement 3 is correct: An interbank call money market is a short-term money market which allows for large financial institutions to borrow and lend money at interbank rates.
    • Statement 4 is incorrect: A zero-coupon bond is a debt security that does not pay interest but instead trades at a deep discount, rendering a profit at maturity, when the bond is redeemed for its full face value.

    Hence option 3rd is correct.

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