When a bank needs funds for day-to-day operational liquidity requirements it may issue:
A) bank bills.
B) CDs.
C) CP.
D) P-notes.

Question

Quizplus · Accepted Answer

CD stands for Certificate of Deposit. It is a type of time deposit offered by banks that allows depositors to invest their money for a specific period of time at a fixed interest rate. CDs are a popular choice for banks to raise funds for their day-to-day operations as they are low risk, have fixed interest rates, and are easily tradable in the secondary market. Bank bills are short-term unsecured promissory notes issued by banks, CP refers to commercial paper and P-notes refer to participatory notes which are not applicable for this context.

When a Bank Needs Funds for Day-To-Day Operational Liquidity Requirements