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    Question

    Under call money market, funds are transacted on an

    overnight basis and under notice money market, funds are transacted for a period between _________?
    A 2 days to 14 days Correct Answer Incorrect Answer
    B 1 day to 21 days Correct Answer Incorrect Answer
    C 7 days to 21 days Correct Answer Incorrect Answer
    D 1 day to 7 days Correct Answer Incorrect Answer
    E 1 day to 14 days Correct Answer Incorrect Answer

    Solution

    Under the call money market, funds are transacted on an overnight basis, which means that the borrowing and lending of funds take place for a duration of one day or overnight. The lender provides funds to the borrower for a day, and the borrower is required to repay the funds the following day along with the interest rate agreed upon. On the other hand, under the notice money market, funds are transacted for a period between 2 days and 14 days. The lender provides funds to the borrower for a duration agreed upon, which can range from 2 days to 14 days. The borrower is required to repay the funds along with the interest rate agreed upon at the end of the agreed duration. In both cases, the funds are usually transacted between banks, financial institutions, and primary dealers, and the interest rate on the funds is determined by the prevailing market conditions such as the demand and supply of funds, monetary policy, and other economic factors.

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