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CDs are short-term borrowings in the form of Usance Promissory Notes having a maturity of not less than 15 days up to a maximum of one year.
They are like bank term deposits accounts. Unlike traditional time deposits these are freely negotiable instruments and are often referred to as Negotiable Certificate of Deposits
Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note.
Who can issue Commercial Paper (CP) Highly rated corporate borrowers, primary dealers (PDs) and satellite dealers (SDs) and all-India financial institutions (FIs)
It is a transaction in which two parties agree to sell and repurchase the same security. Under such an agreement the seller sells specified securities with an agreement to repurchase the same at a mutually decided future date and a price
The Repo/Reverse Repo transaction can only be done at Mumbai between parties approved by RBI and in securities as approved by RBI (Treasury Bills, Central/State Govt securities).
Call Money Market
The call money market is an integral part of the Indian Money Market, where the day-to-day surplus funds (mostly of banks) are traded. The loans are of short-term duration varying from 1 to 14 days.
The money that is lent for one day in this market is known as " Call Money ", and if it exceeds one day (but less than 15 days) it is referred to as " Notice Money ".
Treasury bills, commonly referred to as T-Bills are issued by Government of India against their short term borrowing requirements with maturities ranging between 14 to 364 days.
All these are issued at a discount-to-face value. For example a Treasury bill of Rs. 100.00 face value issued for Rs. 91.50 gets redeemed at the end of it's tenure at Rs. 100.00.
FOREX :- The Foreign Exchange Market
The Foreign Exchange Market
The foreign exchange market is the market where the currency of one country is exchanged for the currency of another country. Most currency transactions are channelled through the world-wide interbank market. Interbank market is the wholesale market in which major banks trade with each other.
Participants of FOREX MKT
Foreign Exchange Rates
A foreign exchange rate is the price of one currency quoted in terms of another currency
A cross rate is an exchange rate between the currencies of two countries that are not quoted against each other, but are quoted against one common currency.
Foreign Exchange Rates
The spot exchange rate is the rate at which a currency can be bought or sold for immediate delivery which is within two business days after the day of the trade.
Bid-ask spread is the difference between the bid and ask rates of a currency.
The forward exchange rate is the rate that is currently paid for the delivery of a currency at some future date.
The forward rate may be at a premium or at a discount.
For a direct quote , the annualised forward discount or premium can be calculated as follows:
Some reasons to trade in FOREX
24-hour forex trading
100:1 Leverage in forex trading
Lower transaction costs
Equal profit potential in both rising and falling markets
The market could move against you.
You could lose your entire investment. Due to the leverage effect!!