What is the price of a 182-day money market security with a face value
of $7,000 if the BEY is 3.574%? - ANSWER $6,877.44
(SOLVE: ($7,000 − P)/P × 365/182 = 0.03574 ($7,000 − P)/P =0.01782 P =
$6,877.44)
A 180-day $3 million CD has a 4.25 percent annual rate quote. If you buy
the CD, how much will you collect in 180 days? - ANSWER $3,063,750
(SOLVE: $3 million × [1 + (0.0425 × 180/360)])
A short-term unsecured promissory note issued by a company is: -
ANSWER commercial paper.
For the purposes for which they are used, money market securities
should have which of the following characteristics?
I. Low trading costs
II. Little price risk
III. High rate of return
IV. Life greater than one year - ANSWER I and II
, 360/n times the difference between the face value and the current value
divided by the face value gives you the discount yield on an instrument -
ANSWER True
The most significant borrower in the U.S. money markets is(are): -
ANSWER the US treasury
Rates on federal funds and repurchase agreements are stated: - ANSWER
on a bond equivalent basis with a 360-day year.
A dealer is quoting a $10,000 face value, 180-day T-bill quoted at 2.75
bid, 2.65 ask. You could buy this bill at ______________ or sell it at
_______________. - ANSWER $9,867.50; $9,862.50
(SOLVE: Buy at 10,000 × [1 − (0.0265 × 180/360)]; sell at 10,000 × [1 −
(0.0275 × 180/360)].)
The most liquid of the money market securities are: - ANSWER T-bills
A time draft payable to a seller of goods with payment guaranteed by a
bank is a: - ANSWER banker's acceptance.
The majority of money market securities are low-denomination, low-risk
investments designed to appeal to individual investors with excess cash.
- ANSWER False
of $7,000 if the BEY is 3.574%? - ANSWER $6,877.44
(SOLVE: ($7,000 − P)/P × 365/182 = 0.03574 ($7,000 − P)/P =0.01782 P =
$6,877.44)
A 180-day $3 million CD has a 4.25 percent annual rate quote. If you buy
the CD, how much will you collect in 180 days? - ANSWER $3,063,750
(SOLVE: $3 million × [1 + (0.0425 × 180/360)])
A short-term unsecured promissory note issued by a company is: -
ANSWER commercial paper.
For the purposes for which they are used, money market securities
should have which of the following characteristics?
I. Low trading costs
II. Little price risk
III. High rate of return
IV. Life greater than one year - ANSWER I and II
, 360/n times the difference between the face value and the current value
divided by the face value gives you the discount yield on an instrument -
ANSWER True
The most significant borrower in the U.S. money markets is(are): -
ANSWER the US treasury
Rates on federal funds and repurchase agreements are stated: - ANSWER
on a bond equivalent basis with a 360-day year.
A dealer is quoting a $10,000 face value, 180-day T-bill quoted at 2.75
bid, 2.65 ask. You could buy this bill at ______________ or sell it at
_______________. - ANSWER $9,867.50; $9,862.50
(SOLVE: Buy at 10,000 × [1 − (0.0265 × 180/360)]; sell at 10,000 × [1 −
(0.0275 × 180/360)].)
The most liquid of the money market securities are: - ANSWER T-bills
A time draft payable to a seller of goods with payment guaranteed by a
bank is a: - ANSWER banker's acceptance.
The majority of money market securities are low-denomination, low-risk
investments designed to appeal to individual investors with excess cash.
- ANSWER False
