Which one of the following is not a “Money Market Instrument”?

Q: Which one of the following is not a “Money Market Instrument”?

A. Treasury bills

B. Commercial Paper

C. Certificate of deposit

D. Equity Shares

E. None of these

 

Answer: D: Equity Shares.

The reason is that equity shares are instruments that last for a long time therefore, they cannot be an instrument used to make money.

Which one of the following is not a “Money Market Instrument”?
Which one of the following is not a “Money Market Instrument”?

The money market is a market where financial institutions provide many investors and borrowers the chance to purchase and sell different types of short-term securities. There isn’t a physically-based “money market.” Instead, it’s an informal trading and banking network connected via fax, telephones machines, and computers. The money markets are present across the United States and abroad. Short-term loans and securities that are sold on the market – which are often referred to as market instruments have maturities ranging from a single day to a year and are highly liquid. Treasury bills and notes issued by federal agencies and certificates of deposit (CDs) and eurodollar deposits, commercial paper bankers’ acceptances Repurchases, and bankers’ acceptances are all examples of instruments. The money market instruments’ suppliers money market instruments are banks and individuals who have a preference for the most liquidity and lowest risk.

 

What’s Money Market?

Money Market is an investment market in which short-term financial assets with a liquidity of less than one year can be traded through stock exchanges. The trading bills or securities are very liquid. They also facilitate participants’ short-term borrowing requirements by trading bills. Participants in this financial market include typically large institutions, banks, and private investors.

 

There is a wide range of instruments that are traded on the market for money in both the stock exchanges NSE as well as BSE. They include Treasury bills as well as certificates of deposit commercial paper, purchase agreements etc. Since the securities that are traded are extremely liquid this market is considered to be a secure location to invest in.

 

Specifics that are part of the Money Market:

  1. The number of assets that are traded is usually very large.
  2. It’s still in the process of evolving. There is always the chance of adding new instruments.
  3. It meets the financial needs of the borrower. It also addresses the investments with an expiration date of one calendar year or less.

 

I hope the much-hyped question “Which one of the following is not a “Money Market Instrument?” is solved now.

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