Chapter 2 Financial Instruments

Multiple Choice Questions

(选作1-26、30-32、35、37、39、40、42、47、52、63、64、66、67

Multiple Choice Questions

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

A) liquidity

B) marketability

C) long maturity

D) liquidity premium

E) C and D

Answer: E Difficulty: Easy

Rationale: Money market instruments are short-term instruments with high liquidity

and marketability; they do not have long maturities nor pay liquidity premiums.

2. Which one of the following is not a money market instrument?

A) a Treasury bill

B) a negotiable certificate of deposit

C) commercial paper

D) a Treasury bond

E) a Eurodollar account

Answer: D Difficulty: Easy

Rationale: Money market instruments are instruments with maturities of one year or less,

which applies to all of the above except Treasury bonds. See Table 2.1, page 33.

3. T-bills are financial instruments initially sold by ________ to raise funds.

A) commercial banks

B) the U. S. government

C) state and local governments

D) agencies of the federal government

E) B and D

Answer: B Difficulty: Easy

Rationale: Only the U. S. government sells T-bills in the primary market.

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