Which of the following is a money market instrument?

• A. Leasing
• B. Hire purchase
• C. Bills of exchange
• D. Overdrafts

Answer: (D)

Money markets deal with very short-term borrowing and lending using securities that are highly liquid and tradable. Bills of exchange fit this role because they are short-term, negotiable instruments used in trade finance and can be discounted or traded in the money market, typically with maturities of a few months. Leasing and hire purchase are asset-financing arrangements for acquiring goods and spread payments over time, not tradable market instruments. An overdraft is a bank credit facility that allows spending beyond the available balance; it’s a line of credit rather than a marketable security. Therefore, the instrument that belongs to the money market is bills of exchange.