Question

Why do most money market securities have large denominations?

Why do most money market securities have large denominations?

Homework Answers

Answer #1

The market has developed for institutional investors because institutional investors have large enough quantities of money to make it costly for them to not invest their excess funds. For most individual investors the dollars lost by not keeping fully invested in interest bearing assets is very minimal.

In absolute dollar terms, large instruments are the only participants with enough cash on hand for it to be worth getting into money markets. For individuals , the interest lost by next investing in money markets is negotiable.

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