Which of the following is a characteristic of a money market financial instrument? (2024)

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Which of the following is a characteristic of a money market financial instrument?

The main characteristic of money market instruments is that they can be easily converted to cash, thereby preserving an investor's cash requirements. The money market and its instruments are usually traded over the counter and, therefore, cannot be done by standalone individual investors themselves.

Which of the following is a characteristic of a money market instrument?

Characteristics of money market securities.

Liquidity. They can be easily converted into cash where need be. Safety. Have very low default risk making them the safest investment.

What are the characteristics of money market instruments?

Characteristics of Money Market Instruments

It is a market for short term financial needs, for example, working capital needs. The main money market instruments are Treasury bills, commercial papers, certificate of deposits, and call money. It is highly liquid as it has instruments that have a maturity below one year.

Which of the following are money markets instruments?

Banker's Acceptance, Treasury Bills, Repurchase Agreements, Certificate of Deposits, and Commercial Papers are a few of the popular money market instruments.

What are three characteristics common to money market securities?

Money market securities are short-term, low-risk, and very liquid. Because of the high degree of safety and liquidity these securities exhibit, they are close to being money, hence their name.

What is not a characteristic of a money market instrument?

Treasury bills, repurchase agreement and commercial paper all are short term investments and have a maturity level of less than one year. Hence, shares and bonds having maturity of more than one year are not considered as money market instrument. Was this answer helpful?

Which of the following is not a characteristics of a money market instrument?

Equity shares are long-term instruments and hence, cannot be a money market instrument. Q. Explain the following money market instrument "Treasury Bill".

What characteristics define the money markets quizlet?

The money markets can be characterized as having securities that trade in one year or less, are of large denomination, and are very liquid. Is a Treasury bond issued 29 years ago with six months remaining before it matures a money market instrument?

What are the characteristics between money market and capital market?

Money markets are typically shorter-term and carry less risk but offer less potential reward. Capital markets are typically longer-term and offer greater risk but potential for greater rewards,” Milan explains.

What is a money market instrument quizlet?

Money Market Securities. Instruments that are traded on the various money markets, usually with a term of less than a year. Consist of negotiable CDs, banker's acceptances, government securities, commercial paper, municipal notes, federal funds, and repos.

Which of the following is a money market instrument quizlet?

Commercial paper, Treasury bills, and banker's acceptances are debt instruments with maturities of 1 year or less and are therefore money market instruments.

What is a money market instrument in finance?

Money market instruments like certificates of deposit, treasury bills, etc., are highly liquid short-term assets. Such financial instruments are traded for less than a year. On the other hand, capital market instruments like bonds and shares are traded for the long term (1 year or more).

What are money market securities characterized by?

Money market securities are characterized by high levels of liquidity and safety, resulting in low risks and low returns. On the other hand, fixed income with maturities longer than one year (long-term debt) and equity (stocks) are under capital markets.

What are the two main characteristics of money?

In order for money to function well as a medium of ex- change, store of value, or unit of account, it must possess six characteristics: divisible, portable, acceptable, scarce, durable, and stable in value.

What are the functions of the money market?

The money market serves several important functions, including providing a platform for short-term borrowing and lending, facilitating liquidity management for financial institutions, and enabling the efficient allocation of funds between surplus and deficit units.

Which of the following is not a money market instrument quizlet?

Corporate Bonds. Money market instruments are short-term instruments, and commercial bonds are debt instruments that generally have a maturity of more than a year. Hence, bonds are not considered money market instruments.

Which of the following is not a financial instrument?

The following are examples of items that are not financial instruments: intangible assets, inventories, right-of-use assets, prepaid expenses, deferred revenue, warranty obligations (IAS 32. AG10-AG11), and gold (IFRS 9.

What is money market explain its main characteristics and limitations?

The money market is a crucial financial market segment where short-term borrowing and lending of funds occur. It facilitates the smooth functioning of the economy by providing a platform for participants to meet their immediate cash needs and manage liquidity.

Which of the following is a characteristic of money?

The characteristics of money are durability, portability, divisibility, uniformity, limited supply, and acceptability. Let's compare two examples of possible forms of money: A cow.

Which one is not an identified characteristic of money?

Many qualities of good money include stability, homogeneity, profitability, divisibility, durability, and others. The properties of Money do not include the availability of Money. Money is able to be stretched is not a characteristic of money.

What are the four characteristics of a financial instrument?

The four fundamental characteristics that determine the value of a financial instrument are (1) The size of the payment that is promised; (2) When the promised payment is to be made; (3) the likelihood that the payment will be made; (4) The conditions under which the payment is to be made.

What are the characteristics of a money market deposit account?

Most money market accounts pay a higher interest rate than regular (passbook) savings accounts and often include check-writing and debit card privileges. They may also come with restrictions that make them less flexible than a regular checking account. They are important for calculating tangible net worth.

What are the main characteristics that can be used to classify financial markets?

The financial markets are classified into four categories: By Nature of Claim, By Maturity of Claim, By the Timing of Delivery, and By Organizational Structure.

Which of the following is a characteristic of a money marketing account?

Final answer: A characteristic of a money market account is that it often offers a higher rate of return than traditional savings accounts. It may also limit the number of transactions, like transfers and withdrawals, but normally allows for checks and debit card purchases.

What are the differences between money market instruments and capital market instruments?

The money market fulfils short-term liquidity needs, while the capital market offers a platform for long-term investing. Money market instruments are more liquid than capital market instruments, and the money market is less risky than the capital market.


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