New Enroll for RBI, PFRDA & NABARD Intro Class! April 18 at 9:15 PM

    Question

    A government treasury department is responsible for

    managing the government's short-term borrowing needs. They are considering issuing a money market instrument to raise funds for a period of fewer than 91 days. Which of the following instruments would be the most appropriate choice for the government in this scenario?
    A Treasury Bills (T-Bills) Correct Answer Incorrect Answer
    B Commercial Paper (CP) Correct Answer Incorrect Answer
    C Certificate of Deposit (CD) Correct Answer Incorrect Answer
    D Cash Management Bills (CMBs) Correct Answer Incorrect Answer
    E Repurchase Agreements (Repos) Correct Answer Incorrect Answer

    Solution

    CMBs are specifically designed to meet the temporary cash flow mismatches of the government and are issued for maturities less than 91 days.

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