Question

Which of the following is a money market security? (select all that apply) a. Negotiable Certificates...

Which of the following is a money market security? (select all that apply)

a. Negotiable Certificates of Deposit

b. Federal Funds

C. U.S. Treasury Notes

D. Common Stock

Homework Answers

Answer #1

Money market funds are short term interest bearing funds that have a maturity of less than 1 year. If the maturity is more than 1 year then we generally call it a capital market fund.

A) Negotiable certificate of deposits are short term Money market instruments that have maturity generally lesser than a year

B) Federal funds are again short term overnight funds which are generally used by banks to borrow from the central bank.They also have maturity less than one year

C) Treasury notes have maturity ranging up-to ten years. So it's not a money market instrument

D) Common stock falls under capital market instruments as they don't have a fixed maturity date and can be held rill many years.

So the correct options are A and B

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