Question : Which of the following is a feature of a money market instrument?
Option 1: High credit risk
Option 2: long maturity period
Option 3: Low liquidity
Option 4: Low interest rate
Correct Answer: Low interest rate
Solution : The correct answer is (d). Low interest rate
Money market instruments are short-term debt securities that are typically characterized by low interest rates. They are considered to be relatively low-risk investments due to their short maturity periods and high liquidity. Money market instruments include Treasury bills, commercial paper, certificates of deposit, and short-term government and corporate bonds. They are commonly used by investors as a means to preserve capital and provide a safe haven for funds in the short term.
Question : Which of the following is a feature of a treasury bill?
Option 2: High interest rate
Option 3: Fixed maturity period
Option 4: No liquidity risk
Question : Which of the following is a feature of a commercial paper?
Option 1: Fixed maturity period
Option 2: High liquidity
Option 3: Low interest rate
Option 4: No credit risk
Question : Which of the following is a feature of a certificate of deposit (CD)?
Option 1: High liquidity
Option 2: Low interest rate
Option 1: Low liquidity
Option 2: High credit rating requirement
Option 3: High interest rate
Option 4: No fixed maturity period
Option 1: High return on investment
Option 2: Long maturity period
Option 3: High liquidity
Option 4: None of the above
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