Question

12.

Riverside Metals recently issued some debt that had an original maturity of nine months. This debt is best classified as a(n):

A.

option contract.

B.

money market instrument.

C.

fixed-income security.

D.

derivative security.

E.

futures contract.

Answer 1

Option a, option contract give managers the right but not the obligation to buy their company's shares in the future at a fixed price.

option b, money market instrument is a high liquid market instrument which operate in the money market with a maturity of less than a year are traded.

Option c, fixed-income security is a type of security which provides fixed returns over a period of time.

Option d, derivative security is an security that derives its value from an underlying asset or a group of assets.

Option e, futures contract is a contract to buy or sell a commodity at a pre-determined price and time in the future.

Hence, the answer is option b.

In case of any query, kindly comment on the solution.