Money Market: MCQ
MULTIPLE-CHOICE QUESTIONS
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
e. All of the above are characteristics of money market securities.
2. Investors in the money markets are generally willing to take which of the following risks?
a. default risk
b. interest rate risk
c. liquidity risk
d. all of the above
e. none of the above
3. Small investors are likely to invest in the money market through ____.
a. directly; commercial paper
b. locally; their credit union
c. indirectly; negotiable CDs
d. indirectly; money market mutual funds
4. Which of the following statements about the money market is true?
a. The money market is a dealer market linked by efficient communications systems.
b. Money market transactions are seldom over $1 million.
c. Money market transactions include more "primary market" trades for a security than secondary market trades.
d. Most money market transactions are conducted by mail.
e. All of the above statements are true.
5. 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. They are sold at a discount.
d. Interest on T-bills is tax-deductible for federal income tax purposes.
6. 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
e.
7. Federal Funds are typically
a. Treasury deposits.
b. Federal Reserve assets.
c. commercial bank deposits at the Federal Reserve.
d. overnight interbank loans settled in immediately available funds
8. The most common money market instrument utilized in the Fed's open market operations is
a. Federal Funds.
b. commercial paper.
c. Treasury bills.
d. Agency securities.
9. Banks can satisfy their short-term borrowing needs by
a. Federal Funds purchased.
b. Federal
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
e. All of the above are characteristics of money market securities.
2. Investors in the money markets are generally willing to take which of the following risks?
a. default risk
b. interest rate risk
c. liquidity risk
d. all of the above
e. none of the above
3. Small investors are likely to invest in the money market through ____.
a. directly; commercial paper
b. locally; their credit union
c. indirectly; negotiable CDs
d. indirectly; money market mutual funds
4. Which of the following statements about the money market is true?
a. The money market is a dealer market linked by efficient communications systems.
b. Money market transactions are seldom over $1 million.
c. Money market transactions include more "primary market" trades for a security than secondary market trades.
d. Most money market transactions are conducted by mail.
e. All of the above statements are true.
5. 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. They are sold at a discount.
d. Interest on T-bills is tax-deductible for federal income tax purposes.
6. 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
e.
7. Federal Funds are typically
a. Treasury deposits.
b. Federal Reserve assets.
c. commercial bank deposits at the Federal Reserve.
d. overnight interbank loans settled in immediately available funds
8. The most common money market instrument utilized in the Fed's open market operations is
a. Federal Funds.
b. commercial paper.
c. Treasury bills.
d. Agency securities.
9. Banks can satisfy their short-term borrowing needs by
a. Federal Funds purchased.
b. Federal