MONEY MARKET QUESTIONS AND ANSWES​

1. The money market deals in: A. Long-term funds
B. Medium-term funds
C. Short-term funds
D. All types of funds
Answer: C. Short-term funds

2. Which of the following is not a money market instrument?
A. Treasury bills
B. Commercial paper
C. Shares
D. Certificates of deposit
Answer: C. Shares

3. The major participant in the money market is: A. Individual investors
B. Commercial banks
C. Insurance companies
D. Mutual funds
Answer: B. Commercial banks

4. Call money market is related to: A. Long-term loans
B. Short notice deposits
C. One-day loan between banks
D. Investment in equity
Answer: C. One-day loan between banks

5. Treasury bills are issued by: A. Reserve Bank of India
B. State Governments
C. Central Government
D. Commercial Banks
Answer: C. Central Government

6. Which of the following has a maturity period of more than one year?
A. Treasury bills
B. Commercial papers
C. Bonds
D. Call money
Answer: C. Bonds

7. The purpose of issuing commercial paper is: A. To raise long-term capital
B. To meet short-term liabilities
C. To invest in stock market
D. None of these
Answer: B. To meet short-term liabilities

8. Certificates of deposit are issued by: A. Companies
B. RBI
C. Commercial banks
D. Government
Answer: C. Commercial banks

9. Which of the following instruments is issued at a discount and redeemed at par? A. Treasury bill
B. Certificate of deposit
C. Bonds
D. Shares
Answer: A. Treasury bill

10. The maturity period of a treasury bill is usually: A. 2 years
B. 1 year
C. Less than 1 year
D. More than 1 year
Answer: C. Less than 1 year

11. What is the usual denomination of Treasury Bills in India?

A. ₹1,000
B. ₹10,000
C. ₹25,000
D. ₹1,00,000
Answer: D. ₹1,00,000

12. Who regulates the money market in India?
A. SEBI
B. Ministry of Finance
C. RBI
D. IRDA
Answer: C. RBI

13. Commercial Paper is issued by: A. RBI
B. Central Government
C. Corporates
D. State Government
Answer: C. Corporates

14. What is the maximum maturity period of Commercial Paper in India?
A. 365 days
B. 91 days
C. 1 year
D. 270 days
Answer: D. 270 days

15. Money Market Mutual Funds invest in: A. Equity
B. Real estate
C. Short-term debt instruments
D. Government securities only
Answer: C. Short-term debt instruments

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16. The primary function of the money market is:
A. Long-term lending
B. Short-term borrowing and lending
C. Issuing equity shares
D. Regulating foreign trade
Answer: B

17. Call money is typically borrowed for:
A. 1 to 15 days
B. 1 to 90 days
C. Overnight
D. More than 1 year
Answer: C

18. Which of the following is not a money market instrument?
A. Treasury Bill
B. Commercial Paper
C. Equity Shares
D. Certificate of Deposit
Answer: C

19. Treasury bills are issued by:
A. Reserve Bank of India
B. Scheduled Banks
C. Ministry of Commerce
D. SEBI
Answer: A

20. Commercial paper is a:
A. Secured instrument
B. Unsecured instrument
C. Convertible bond
D. Government security
Answer: B

21. Which financial institution plays a key role in regulating the Indian money market?
A. Ministry of Finance
B. NABARD
C. RBI
D. SEBI
Answer: C

22. Which is a feature of the money market?
A. Deals in shares and debentures
B. Has long maturity periods
C. Deals in short-term funds
D. Operates under Ministry of Finance
Answer: C

23. The money market is a market for:
A. Buying and selling of foreign exchange
B. Long-term capital
C. Short-term funds and financial instruments
D. Agricultural produce
Answer: C

24. Certificate of Deposit (CD) is issued by:
A. Commercial banks
B. Reserve Bank of India
C. SEBI
D. State Government
Answer: A

25. Which of the following has the shortest maturity period?
A. Certificate of Deposit
B. Treasury Bill
C. Call Money
D. Commercial Paper
Answer: C

26. Who are the main participants in the money market?
A. Government only
B. Only Individuals
C. Banks, Financial Institutions, and Corporates
D. NGOs and Trusts
Answer: C

27. The main objective of the money market is:
A. Encouraging foreign investment
B. Facilitating long-term investment
C. Providing liquidity to the financial system
D. Increasing industrial productivity
Answer: C

28. Which of these is a regulated segment of the money market?
A. Equity market
B. Forex market
C. Government securities market
D. Commodity market
Answer: C

29. The usual maturity period of Treasury Bills is:
A. 7 days to 15 days
B. 91 days to 364 days
C. 1 to 5 years
D. More than 10 years
Answer: B

30. Which of the following is true about Commercial Paper?
A. Issued by government
B. Used by companies to meet short-term liabilities
C. It is interest-free
D. Issued to individuals only
Answer: B