UPSC Previous Year Question | Prelims GS | 2020

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.

  1. 1 and 2 only
  2. 4 only
  3. 1 and 3 only
  4. 2, 3 and 4 only

Answer

Correct Answer

1 and 3 only

Explanation

Commercial paper is a short-term unsecured promissory note and call money is very short-term inter-bank lending. A Certificate of Deposit is issued by banks (not by the RBI) and is short-term, and zero-coupon bonds pay no interest and are issued at a discount.

Topics: economy, financial markets & instruments, money & banking, money market instruments