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CA Foundation Money Market — practice questions — page 2

Explore 52 free Money Market questions in CA Foundation Business Economics. Open each question or exercise to read its content, reference answers and available explanation.

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Money Market questions and exercises with answers

Showing questions 31–52 of 52.

The rate the RBI pays when it borrows from banks is called what?Read the answer and worked solution →Which securities serve as collateral in LAF repo operations?Read the answer and worked solution →The first stage of the LAF scheme in India began from June of which year?Read the answer and worked solution →After the May 2011 policy statement, the reverse repo rate was set how far below the repo rate?Read the answer and worked solution →Which rate has become the key policy rate signalling India's monetary stance?Read the answer and worked solution →LAF has emerged as the principal instrument for doing what?Read the answer and worked solution →Commercial paper is best described as what kind of instrument?Read the answer and worked solution →How is commercial paper usually sold?Read the answer and worked solution →Commercial paper is normally used to fund which kind of needs?Read the answer and worked solution →Which is an advantage of commercial paper for the issuer?Read the answer and worked solution →For an established firm, commercial paper is a lower-cost alternative to what?Read the answer and worked solution →A certificate of deposit (CD) is what kind of deposit?Read the answer and worked solution →What mainly differs between a CD and a savings account?Read the answer and worked solution →What usually applies to a withdrawal from a CD before maturity?Read the answer and worked solution →A longer CD term usually earns a higher rate, except when which condition applies?Read the answer and worked solution →What does a CD ladder strategy do?Read the answer and worked solution →Treasury bills (T-bills) are zero-coupon securities maturing in how long?Read the answer and worked solution →How does a T-bill investor earn a return?Read the answer and worked solution →Accrual instruments are issued at face value and mature at what amount?Read the answer and worked solution →Federal funds are usually lent on what basis?Read the answer and worked solution →Trading companies often buy bankers' acceptances to pay whom?Read the answer and worked solution →Eurodollar deposits are deposits in US dollars held where?Read the answer and worked solution →

Worked practice questions

The rate the RBI pays when it borrows from banks is called what?

  1. Bank rate level
  2. MSF rate level
  3. Call money rate
  4. Reverse repo rate
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Correct answer: D. Reverse repo rate

When the RBI borrows from banks the interest it pays is the reverse repo rate.

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Which securities serve as collateral in LAF repo operations?

  1. Government securities
  2. Private company shares
  3. Gold ornament stock
  4. Real estate deeds
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Correct answer: A. Government securities

Government of India securities are the collateral for both repo and reverse repo under LAF.

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The first stage of the LAF scheme in India began from June of which year?

  1. 1991
  2. 2000
  3. 2008
  4. 2011
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Correct answer: B. 2000

The policy measures announced in 2000 started the first stage of LAF from June 2000.

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