12th Commerce - Book Back Answers - Chapter 6 - English Medium Guides ~ Kalvi Tips

Plus Two / 12th Commerce - Book Back Answers - Chapter 6 - English Medium

Tamil Nadu Board 12th Standard Commerce - Chapter 6: Book Back Answers and Solutions

This post covers the book back answers and solutions for Chapter 6 – Commerce from the Tamil Nadu State Board 12th Standard textbook. These detailed answers have been carefully prepared by our expert teachers at KalviTips.com.

We have explained each answer in a simple, easy-to-understand format, highlighting important points step by step under the relevant subtopics. Students are advised to read and memorize these subtopics thoroughly. Once you understand the main concepts, you’ll be able to connect other related points with real-life examples and confidently present them in your tests and exams.

By going through this material, you’ll gain a strong understanding of Commerce Chapter 6 along with the corresponding book back questions and answers (PDF format).

Question Types Covered:

1 Mark Questions: Choose the correct answer, Fill in the blanks, Identify the correct statement, Match the following
2 Mark Questions: Answer briefly
3, 4, and 5 Mark Questions: Answer in detail

All answers are presented in a clear and student-friendly manner, focusing on key points to help you score full marks.

All the best, Class 12 students! Prepare well and aim for top scores. Thank you!

Chapter 6: Money Market

I. Choose the correct answer.

1. The money invested in the call money market provides high liquidity with _________.
a) Low profitability
b) High profitability
c) Limited profitability
d) Medium profitability
Answer Key:
a) Low profitability

2. A major player in the money market is the_________.
a) Commercial Bank
b) Reserve bank of India
c) State bank of India
d) Central Bank
Answer Key:
a) Commercial Bank

3. Debt instruments are issued by corporate houses are raising short-term financial resources from the money market are called_________.
a) Treasury bills
b) Commercial paper
c) Certificate of deposit
d) Government securities
Answer Key:
b) Commercial paper

4. The market for buying and selling of commercial bills of Exchange is known as a _________.
a) Commercial paper market
b) Treasury bill market
c) Commercial bill market
d) Capital market
Answer Key:
c) Commercial bill market

5. A marketable document of title to a time deposit for a specified period may be referred to as a _________.
a) Treasury Bill
b) Certificate of Deposit
c) Commercial Bill
d) Government. Securities
Answer Key:
b) Certificate of Deposit

II. Very short answer questions.

1. What is a CD market?
Answer Key:

Certificate of Deposits are short-term deposit instruments issued by banks and financial institutions to raise large sums of money.
Certificate of Deposits are issued in the form of usance promissory notes.

2. What is Government Securities Market?
Answer Key:

A market whereby the Government or gilt-edged securities can be bought and sold is called ‘Government Securities Market’

3. What do you meant by Auctioning?
Answer Key:

A method of trading whereby merchants bid against one another and where the securities are sold to the highest bidder is known as ‘auctioning’

4. What do you meant by Switching?
Answer Key:

The purchase of one security against the sale of another security carried out by the RBI in the secondary market as part of its open market operations is described as ‘Switching’

III. Short answer questions.

1. What are the features of Treasury Bills?

(any 3)
Answer Key:
Treasury Bills incorporate the following general features.
1. Issuer
2. Finance Bills
3. Liquidity
4. Vital Source
5. Monetary Management

2. Who are the participants of Money Market? (any 3)
Answer Key:

There are many participants operating in the Money Market.
The participants deal with the money market instruments like Treasury Bills, Commercial Bills, Commercial Papers, etc.,

1. Government of different countries
2. Central Banks of different countries
3. Private and Public Banks
4. Mutual Funds Institutions
5. Insurance Companies
6. Non-Banking Financial Institutions
7. RBI and SBI
8. Commercial Banks
9. State Governments
10. Public

3. Explain the types of Treasury Bills? (any 3)
Answer Key:
1. 91 days Treasury Bills

Ninety one days Treasury Bills are issued at a fixed discount rate of 4 per cent as well as through auctions.

2. 182 days Treasury Bills

182 Treasury Bills and they are issued on tap basis throughout the week.

3. 364 days Treasury Bills.

364 days Treasury Bills do not carry any fixed rate.

4. What are the types of Commercial Bill?

(any 3)
Answer Key:
a. Demand Bills

A demand bill is one wherein no specific time of payment is mentioned.
So, demand bills are payable immediately when they are presented to the drawee.

b. Clean bills and documentary Bills

Bills that are accompanied by documents of title to goods are called documentary bills.
Clean bills are drawn without accompanying any document.
E.g. Railway Receipt and Lorry Receipt

c. Inland bills and Foreign Bills

Bills that are drawn and payable in India on a person who is resident in India are called inland bills.
Bills that are drawn outside India and are payable either in India or outside India are called foreign bills.

d. Indigeneous Bills

The drawing and acceptance of indigenous bills are governed by native custom or usage of trade.

e. Accommodation Bills

Accommodation bills are those which do not arise out of genuine trade of transactions.

IV. Long answer questions.

1. Differentiate between the Money Market and Capital Market. (any 5)
Answer Key:

Features	Money Market	Capital Market
Duration of Funds	It is market for short-term loanable funds for a period of not exceeding one year.	It is market for a long-term funds exceeding period of one year.
Liquidity	High liquidity in Money Market.	Low liquidity in Capital Market.
Risk	Low credit in Money Market.	High credit in Capital Market.
Price Discovery	No price discovery mechanism and exists in this Market.	Price discovery mechanism exists in Capital Market.
Underwriting	Underwriting is not a primary function.	Underwriting is a primary function.
Dominant Institutions	Commercial Banks are the dominant institutions.	Non-banking financial companies and special financial institutions.

2. Explain the characteristics of Money Market? (any 5)
Answer Key:
1. Short-term Funds:

It is a market purely for short-term funds or financial assets called near money.

2. Maturity Period:

It deals with financial assets having a maturity period up to one year only.

3. Conversion of Cash:

It deals with only those assets which can be converted into cash readily without loss and with minimum transaction cost.

4. Existence of Secondary Market:

There should be an active secondary market for these instruments.

5. Wholesale Market:-

It is a wholesale market and the volume of funds or financial assets traded in the market is very large.

3. What are the characteristics of Government Securities?

(any 5)
Answer Key:
1. Auctioning:

A method of trading whereby merchants bid against one another and where the securities are sold to highest bidder is known as ‘auctioning’.

2. Switching:

The purchase of one security against the sale of another security carried out by the RBI in the secondary market as part of its open market operations is described as ‘Switching’

3. RBI Special Role:

RBI takes a special and an active role in the purchase and sale of these securities as part of its monetary management exercise.

4. Nature of Securities:

Securities offer a safe avenue of investment through guaranteed payment of interest and repayment of principal by the Government.

5. Liquidity Profile:

The liquidity profile of gilt-edged securities varies. Accordingly liquidity profile of securities issued by Central Government is high.

Prepared By:

B. MUTHUKUMAR
PG ASST COMMERCE
MKVK MATRIC HR SEC SCHOOL
TENKASI