With reference to the Indian economy, consider the following statements: 1. 'Commercial Paper' is a…
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
4 only
1 and 3 only
3 and 4 only
Solution
Commercial Paper is a short-term unsecured promissory note (1 correct). CD is a short-term instrument issued by banks, not long-term and not by RBI (2 wrong). Call money is short-term inter-bank finance (3 correct). ZCBs do not bear interest — they are sold at discount and redeemed at face value, typically long-term (4 wrong). Answer: (c) 1 and 3 only.