Question

Which of the following is true regarding call rate?

• A. A rise in call money rates makes other sources of finance cheaper.
• B. There is an inverse relationship between call rates and other short-term money market instruments.
• C. It is a highly volatile rate that varies from day-to-day and sometimes even from hour-to-hour.
• D. All of the above

Answer 1

The correct option is D All of the above

Call rate can be defined as the rate paid on call money. It is very volatile rate which varies from day to day and sometimes from hour to hour. Following statements are true regarding call rate:

a) A rise in call money rates makes other sources of finance cheaper.

b) There is an inverse relationship between call rates and other short-term money market instruments.

c) It is a highly volatile rate that varies from day-to-day and sometimes even from hour-to-hour.