A) Most money market securities do not pay interest. Instead, the investor pays less for the security than it will be worth when it matures.
B) Pension funds invest a portion of their assets in the money market to have sufficient liquidity to meet their obligations.
C) Unlike most participants in the money market, the U.S. Treasury Department is always a demander of money market funds and never a supplier.
D) All of the above are true.
E) Only A and B of the above are true.
G) None of the above
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A) should have an efficiency advantage in gathering information that would eliminate the need for the money markets.
B) exists primarily to mediate the asymmetric information problem between saver-lenders and borrower-spenders.
C) is subject to more regulations and governmental costs than the money markets.
D) all of the above are true.
E) only A and B of the above are true.
G) A) and C)
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A) giving consumers indirect access to money markets.
B) combining consumers' investments to purchase money market securities on their behalf.
C) borrowing in capital markets to finance purchases of money market securities.
D) assisting the government in its sales of U.S. Treasury securities.
F) B) and C)
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A) were not subject to deposit reserve requirements.
B) were not subject to the deposit interest rate ceilings.
C) were not limited in how much they could borrow from depositors.
D) had the advantage of all the above.
E) had the advantage of only A and B of the above.
G) A) and B)
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B) False
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B) False
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A) is not generally traded in a secondary market.
B) usually has a term to maturity that is longer than a year.
C) is not popular with most money market investors because of the high default risk.
D) all of the above.
E) only A and B of the above.
G) B) and D)
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A) can be bought and sold until they mature.
B) are issued only by large money center banks.
C) carry low interest rates because of the very low default risk.
D) are all of the above.
E) are only A and B of the above.
G) B) and E)
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A) manage liquidity.
B) take advantage of anticipated changes in interest rates.
C) lend or borrow for a day or two with what is essentially a collateralized loan.
D) do all of the above.
E) do only A and B of the above.
G) A) and B)
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B) False
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A) certainly pay less than if you had submitted a noncompetitive bid.
B) probably pay more than if you had submitted a noncompetitive bid.
C) pay the average of prices offered in other successful competitive bids.
D) pay the same as other successful competitive bidders.
F) A) and B)
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B
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B) False
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A) are time deposits with fixed maturities and are, therefore, somewhat illiquid.
B) may offer the borrower a lower interest rate than can be received in the domestic market.
C) are limited to London banks.
D) are all of the above.
E) are only A and B of the above.
G) B) and C)
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A) it is backed (secured) by some bundle of assets.
B) its maturity usually extends well beyond 1 year.
C) both A and B of the above.
D) neither A nor B of the above.
F) A) and C)
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A) The interest rates on all money market instruments move very closely together over time.
B) The secondary market for Treasury bills is extensive and well developed.
C) There is no well-developed secondary market for commercial paper.
D) All of the above are true.
E) Only A and B of the above are true.
G) C) and D)
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B) False
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Answered by ExamLex AI
The money markets are referred to as wholesale markets because they primarily deal with large denominations of financial instruments, such as government securities, certificates of deposit, and commercial paper. These markets cater to institutional investors, corporations, and financial institutions who have substantial amounts of funds to invest or borrow. The transactions in the money markets are typically conducted in large volumes and involve high-value instruments, making them more suitable for wholesale or large-scale participants. In contrast, retail markets cater to individual investors and smaller-scale transactions. Therefore, the money markets are called wholesale markets due to their focus on large-scale participants and significant financial instruments.
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Treasury bills, often referred to as T-b...View Answer
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B) False
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A) the money markets have a distinct cost advantage over banks in providing short-term funds.
B) the money markets have a distinct cost advantage over banks in providing long-term funds.
C) banks have a distinct cost advantage over the money markets in providing short-term funds.
D) the money markets cannot allocate short-term funds as efficiently as banks can.
F) A) and B)
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A
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