(TCO 6) Investors in the money markets are generally willing to take which of the following risks? (Points : 3)
Interest rate risk
None of the above
Question 2.2. (TCO 6) Which of the following statements about the money market is true? (Points : 3)
The money market is a dealer market linked by efficient communications systems.
Money market transactions are seldom over $1 million.
Money market transactions include more “primary market” trades for a security than secondary market trades.
Most money market transactions are conducted by mail.
Question 3.3. (TCO 6) Which statement about Treasury bills is not true? (Points : 3)
They have maturities less than one year.
Most are sold by “book-entry” method.
They are sold at a discount.
Interest on T-bills is tax-deductible for federal income tax purposes.
Question 4.4. (TCO 6) Banks can satisfy their short-term borrowing needs by (Points : 3)
Federal Funds purchased.
Federal Funds sold.
issuing negotiable CDs.
both Federal Funds purchased and issuing negotiable CDs.
Question 5.5. (TCO 6) When a firm issuing commercial paper uses a backup line of credit, it _____. (Points : 3)
increases the credit risk for investors
decreases the credit risk for investors
has no impact on investors
decreases the marketability of commercial paper
Question 6.6. (TCO 6) Banks invest in government securities for a variety of reasons except (Points : 3)
acceptable for collateral.
high relative yield.
Question 7.7. (TCO 6) Which of the following money market instruments would typically be used in international transactions? (Points : 3)
A Treasury bill
A banker’s acceptance
A negotiable CD
Question 8.8. (TCO 6) Large industrial U.S. corporations are involved in the money market by (Points : 3)
investing excess cash balances.
issuing commercial paper.
investing excess cash balances and issuing commercial paper.
Question 9.9. (TCO 6) Which of the following money market instruments is not sold on a discount basis? (Points : 3)
Negotiable certificates of deposit
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