Question : Which of the following statement is correct? Statement 1: Call money is a method under which banks borrow from each other so that CRR is maintained. Statement 2: The call money transactions are made generally on telephone the paper formality is completed afterwards.
Option 1: Both are true
Option 2: Both are false
Option 3: Statement 1 is true and statement 2 is false.
Option 4: Statement 1 is false and statement 2 is true.
Correct Answer: Both are true
Solution : Call Money a method under which banks borrow from each other so that CRR is maintained. The interest rate used for call money transaction is known as call rate which varies from day to day and sometimes even from hour to hour. The call money transactions are made generally on the telephone and the paper formalities completed afterwards.
Hence, option A is correct.
Question : Statement 1: Repo rate is the rate at which the central bank lends money to commercial banks.
Statement 2: Reverse repo rate is the rate at which banks borrow money from each other.
Option 1: Statement 1 is true, and statement 2 is true.
Option 2: Statement 1 is true, but statement 2 is false.
Option 3: Statement 1 is false, and statement 2 is true.
Option 4: Statement 1 is false, and statement 2 is false.
Question : Statement 1: Commercial banks are major participants in the money market.
Statement 2: Commercial banks are exclusively involved in the primary market.
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