Fin 3080 final exam 2023 Correct Questions & Answers

money markets - ANSWER markets that trade debt securities or instruments with maturities of less than one year motivation behind money markets - ANSWER cash on corporate balance sheets is mostly invested in money market securities. gives higher returns than holding cash and are very liquid major players in money markets - ANSWER governments, corporations, banks and mutual funds purpose of money markets - ANSWER transfer funds from those with short-term excess funds to those with short-term needs for funds importance of money markets - ANSWER they serve to reallocate the fixed amounts of liquid funds available in the markets at any particular time characteristics of money markets - ANSWER 1. original maturity of one year or less 2. low default risk 3. large denomination (generally sold in units of $1M - $10M Treasury Bills (T-Bills) - ANSWER short-term debt obligations the U.S. government sells to raise money T-bill denomination, maturities, and purchase - ANSWER - multiples of $100, typically $1000, $5000 or $10,000 - typically 13 weeks to 26 weeks, but can be from a few days to 52 weeks - a round lot of $5M in primary