CBSE Questions for Class 12 Commerce Business Studies Financial Market Quiz 8 - MCQExams.com

Call money is short term finance repayable on demand, with a maturity period of one day to fifteen days, used for inter-bank transactions. The interest rate paid on call money loans is known as the call rate. There is an inverse relationship between call rates and other short-term money market instruments

Call money is a method by which banks borrow from each other to be able to maintain the cash reserve ratio. The interest rate paid on call money loans is known as the call rate. It is a highly volatile rate.

The interest rate paid on call money loans is known as the call rate. There is an inverse relationship between call rates and other short-term money market instruments. A rise in call money rates makes other sources of finance such as commercial paper and certificates of deposit cheaper in comparison for banks raise funds from these sources.

In offer for sale, securities are not issued directly to the public but are offered for sale through intermediaries like issuing houses or stock brokers. In this case, a company sells securities en-bloc at an agreed price to brokers who, in turn, resell them to the investing public.

The new issue market is another name for the primary market. Security is sold for the first time in this market. The secondary market, on the other hand, is where issued or second-hand securities are sold and bought. Existing investors sell the securities to new investors. Sometimes the investor is in need of cash and another investor wants to buy the share of the company as he could not get directly from the company.
Hence, option (C) is the correct answer.

Commercial paper is a short-term unsecured promissory note issued by large and creditworthy companies to raise short-term funds at lower rates of interest than market rates. The issuance of commercial paper is an alternative to bank borrowing for large companies that are generally considered to be financially strong.

The basic function of a stock exchange is the creation of a continuous market where securities are bought and sold. It gives investors the chance to disinvest and reinvest. This provides both liquidity and easy marketability to already existing securities in the market.