Differentiate the following in brief: (iv) Certificate of Deposit and Commercial Paper.
CS Professional · Banking - Law and Practice · PYQS · December 2018
Differentiate the following in brief: (iv) Certificate of Deposit and Commercial Paper.
Answer & Explanation:
Certificate of Deposit (CD) Commercial Paper (CP) A certificate of deposit (which is also a money market instrument) is issued by a bank. It is issued at discount to be redeemed at par on the maturity date. Commercial papers are issued by companies with high credit ratings, in the form of promissory notes, at discount but repayable at par, to their holder at maturity. Commercial papers are money market instruments and issued as per the guidelines of the Reserve Bank of India.
Topics: Money Market Instruments
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