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  • Money Market Questions

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    Fritzie Ann Zartiga
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    The document contains 20 multiple choice questions testing knowledge of money market instruments and terms. The questions cover characteristics of money market instruments; liabilities of non-financial corporations; definitions of bankers' acceptances, reverse repurchase agreements, and money market funds; instruments that are sold at a discount; mechanisms for short-term borrowing; the role of central banks; and uses of trade finance and money market instruments by corporations and banks.

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    The document contains 20 multiple choice questions testing knowledge of money market instruments and terms. The questions cover characteristics of money market instruments; liabilities of non-financial corporations; definitions of bankers' acceptances, reverse repurchase agreements, and money market funds; instruments that are sold at a discount; mechanisms for short-term borrowing; the role of central banks; and uses of trade finance and money market instruments by corporations and banks.

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    472 views5 pages

    Money Market Questions

    Uploaded by

    Fritzie Ann Zartiga
    The document contains 20 multiple choice questions testing knowledge of money market instruments and terms. The questions cover characteristics of money market instruments; liabilities of non-financial corporations; definitions of bankers' acceptances, reverse repurchase agreements, and money market funds; instruments that are sold at a discount; mechanisms for short-term borrowing; the role of central banks; and uses of trade finance and money market instruments by corporations and banks.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 5

    1. Which of the following is not a characteristic of money market instruments?

    A. Short term to maturity


    B. Small denominations
    C. Low default risk
    D. High marketability

    2. Which of the following may be a liability of a non-financial business


    corporation?
    A. Commercial paper
    B. Federal Funds
    C. Treasury securities
    D. Agency securities

    3. A time draft drawn on and accepted by a commercial bank that orders to pay a
    specified amount of money to the bearer on a given date is called a _______
    A. Letter of credit
    B. Negotiable certificate of deposit
    C. Banker's acceptance
    D. Reverse repurchase agreement

    4. Which of the following money market rates is studied closely for indicators of
    changes in Federal Reserve monetary policy?
    A. Federal Funds
    B. Treasury bills
    C. Commercial paper
    D. Banker's acceptances

    5. The T-bill rate quoted by the Federal Reserve banks is the


    A. Bank discount rate.
    B. The true rate.
    C. Effective annual rate.
    D. Bond equivalent rate.
    6. A reverse repurchase agreement calls for
    A. a firm to sell securities with the agreement to buy them back later at a
    higher price.
    B. a firm to buy securities with the agreement to sell them back later at a
    higher price.
    C. a firm to sell securities with the agreement to buy them back later at a
    lower price.
    D. a firm to buy securities with the agreement to sell them back later at a
    lower price

    7. Which of the following do not participate in the money markets?


    A. Commercial banks
    B. The Federal Reserve
    C. U.S. Treasury dealers
    D. None of the above

    8. Which of the following money market instruments is issued at face value with
    an “add on” rate paid over the face value?
    A. Commercial paper
    B. Negotiable certificates of deposit.
    C. Treasury bills
    D. Banker's acceptances

    9. Which statement about Treasury bills is not true?


    A. They have maturities less than one year.
    B. Most are sold by "book-entry" method.
    C. Interest on T-bills is tax-deductible for federal income tax purposes
    D. They are sold at a discount.

    10. It is defined as a mechanism through which short-term fund are borrowed.

    A. Money Market
    B. Bond Market
    C. International Market
    D. Equity Market
    11. A financial institution that has the privileged to control the production and
    distribution of money.
    A. Central bank
    B. Commercial bank
    C. Universal bank
    D. World Bank

    12. It is a type of mutual fund that invests in high-quality ,short term debt
    instruments.

    A. Mutual fund
    B. Hedge fund
    C. Money market fund
    D. Pension fund

    13. It is a written instrument or document such as check, draft, and promissory note
    that manifest the pledge or duty of one individual to pay money to another

    A. Certificate of deposit
    B. Treasury bills
    C. Repurchase agreement
    D. Commercial paper

    14. It is a short term agreement to sell securities in order to buy them back at
    slightly higher price

    A. Certificate of deposit
    B. Treasury bills
    C. Repurchase agreement
    D. Commercial paper

    15. It is offered by banks and credit unions.

    A. Money market funds


    B. Money market accounts
    C. Market Money Funds instrument
    D. Money market funds

    16. One of the world’s biggest capital market and consists of sophisticated
    financial instrument

    A. Money Market
    B. International Market
    C. Peso Market
    D. Euro- Dollar Market

    17. A safer and more conservative investment than stocks and bonds offering lower
    opportunity for growth.

    A. Certificate of deposit
    B. Commercial paper
    C. Bankers Acceptance
    D. Repurchase agreement

    18. A sectors of economics that experience a higher growth that to others

    A. Growth Industries
    B. CAGR
    C. Capital Market
    D. Trade Finance

    19. It is used when financing is required by buyers and sellers to assist them with
    trade cycle funding gap

    A. CAGR
    B. Trade Finance
    C. Mortgage Market
    D. Bankers Acceptance
    20. They use money market instruments mainly for liquidity issues

    A. Corporation
    B. Dealers
    C. Federal Agency
    D. Banks

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