Question

Match the following money market instrument with its description below. Write the correct letter next to the corresponding question.

A) T-bills B) Commercial paper C) Banker’s acceptance

22. short term debt instrument that is guaranteed for payment by a commercial bank______

23. short term promissory note issued by a large corporations with strong credit ratings ______

24. securities issued by the federal government to finance its budgets _______

Answer 1

Answer 22

C) Banker’s acceptance- short term debt instrument that is guaranteed for payment by a commercial bank. It has following details:

i) Amount of funds

ii) Date of payment

iii) The partyto which the payment is owed..

Answer 23

B. Commercial paper-short term promissory note issued by a large corporations with strong credit ratings.The tenure generally do not exceed 270 days. It has fixed maturity amount

Answer 24

A. T-bills- securities issued by the federal government to finance its budgets. These are backed by Treasury Department