Money Market Instruments Quiz
5 Questions
5 Views

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to lesson

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the definition of money market?

  • The buying and selling of equity instruments maturing in one year or less
  • The buying and selling of debt instruments maturing in less than two years (correct)
  • The buying and selling of equity instruments maturing in more than one year
  • The buying and selling of debt instruments maturing in more than two years

    • Which of the following is NOT a money market security?

  • Commercial papers
  • Treasury bills
  • Corporate bonds (correct)
  • Banker's acceptances

    • What are banker's acceptances?

  • Securities used to warehouse funds until needed
  • Debt instruments maturing in one year or less
  • Short-term debt obligations of a private-sector firm or a government-sponsored corporation
  • Promissory notes issued by non-financial firms to a bank in return for a loan (correct)

    • What is the definition of yield to maturity?

    <p>The bonds' internal rate of return</p> Signup and view all the answers

    What is the difference between preferred shares and participating preference shares?

    <p>Preferred shares have a claim against income and assets before ordinary shares but after debt, while participating preference shares entitle its holders to share in profits above and beyond the declared dividend</p> Signup and view all the answers

    Study Notes

    Money Market

    • The money market is a market for short-term debt securities with a maturity period of less than one year, providing a means for borrowers to access short-term funding and investors to earn returns on their short-term surplus funds.

    Types of Money Market Securities

    • Examples of money market securities include commercial paper, treasury bills, certificates of deposit, and banker's acceptances.
    • NOT a money market security: Common Stock (as it is a long-term security)

    Banker's Acceptances

    • A banker's acceptance is a negotiable instrument where a bank guarantees payment to a seller of goods or services on behalf of a buyer, making it a low-risk investment.

    Yield to Maturity

    • Yield to maturity is the total return on an investment, including interest and any capital gains or losses, calculated from the time of purchase until the bond's maturity date.

    Types of Preferred Shares

    • Preferred shares are a type of equity that has a higher claim on assets and earnings than common shares, and typically offers a fixed dividend rate.
    • Participating preferred shares are a type of preferred shares that, in addition to the fixed dividend, also participate in any additional dividends paid to common shareholders, making them more valuable.

    Studying That Suits You

    Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

    Quiz Team

    Description

    Test your knowledge on the Money Market and its various financial instruments such as Commercial Papers and Banker's Acceptances with this quiz! Learn about the buying and selling of debt instruments with a maturity of one year or less and how these securities are used to warehouse funds until needed. Explore the low risk and high liquidity nature of money market investments and their returns in this informative quiz.

    More Like This

    Use Quizgecko on...
    Browser
    Open
    Browser
    Browser