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Questions and Answers
Which of the following statements about money market securities is incorrect?
Which of the following statements about money market securities is incorrect?
- They have a maturity of one year or less.
- They are commonly purchased by households, corporations, and governments with short-term funds.
- They are issued in the primary market through a telecommunications network.
- They are not liquid and cannot be sold in the secondary market. (correct)
Which of the following statements about T-bills (Treasury bills) is true?
Which of the following statements about T-bills (Treasury bills) is true?
- They are issued by corporations to obtain short-term financing.
- They have a par value of $10,000 or multiples of $10,000.
- They are sold at a premium to their par value.
- They are backed by the federal government and are virtually free of credit risk. (correct)
If an investor purchases a $10,000 T-bill at a discount of $9,800, what is the investor's gain at maturity?
If an investor purchases a $10,000 T-bill at a discount of $9,800, what is the investor's gain at maturity?
- $180
- $200 (correct)
- $220
- $210
Which of the following statements about the issuance of T-bills is correct?
Which of the following statements about the issuance of T-bills is correct?
Which of the following is NOT a characteristic of money market securities mentioned in the text?
Which of the following is NOT a characteristic of money market securities mentioned in the text?
Based on the information provided, which of the following statements is true?
Based on the information provided, which of the following statements is true?
What is the minimum par value for T-bills now?
What is the minimum par value for T-bills now?
Why do depository institutions retain a portion of their funds in assets that can be easily liquidated?
Why do depository institutions retain a portion of their funds in assets that can be easily liquidated?
What backs Treasury bills, making them virtually free of credit risk?
What backs Treasury bills, making them virtually free of credit risk?
Why do individuals with substantial savings invest indirectly through money market funds?
Why do individuals with substantial savings invest indirectly through money market funds?
In what circumstance do corporations invest in T-bills?
In what circumstance do corporations invest in T-bills?
What is the primary reason why commercial paper typically offers a higher yield than T-bills with the same maturity?
What is the primary reason why commercial paper typically offers a higher yield than T-bills with the same maturity?
If an investor purchases a $100,000 commercial paper at a discount of $99,000, and holds it until maturity, what is the investor's approximate yield?
If an investor purchases a $100,000 commercial paper at a discount of $99,000, and holds it until maturity, what is the investor's approximate yield?
Which of the following statements about negotiable certificates of deposit (NCDs) is correct?
Which of the following statements about negotiable certificates of deposit (NCDs) is correct?
What is the primary purpose of a repurchase agreement (repo) in the money market?
What is the primary purpose of a repurchase agreement (repo) in the money market?
Which of the following statements about the pricing of Treasury bills (T-bills) is correct?
Which of the following statements about the pricing of Treasury bills (T-bills) is correct?
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