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Question

Which is / are the essential feature(s) of a call money market?

A
Maturity period of 1 - 14 days
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B
Market determined interest rates
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C
low liquidity
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D
High agency costs
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E
Both (A) and (B) above
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Solution

The correct option is E Both (A) and (B) above
The call money market is most liquid of all short term money market segments and the maturity period for call loans vary from 1 to 14 days. In call money market any amount could be lent or borrowed at an interest rate which is acceptable to both borrower and lender, i.e. they are market-determined interest rates.

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