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  1. Question #1 of 84Question ID: 1269001
    The repayment or maturity date of a banker's acceptance is normally which of the following?




    • C)
    • Explanation

    Banker's acceptances are short-term time drafts, making them money market instruments. Maturity (payback) dates are normally between 1 day and 270 days (9 months).
  2. Question #2 of 84Question ID: 1268990
    Which of the following obligations is backed by the full faith and credit of the United States Government?




    • B)
    • Explanation

    GNMA is a government-owned corporation that supports the Department of Housing and Urban Development. Ginnie Maes are the only agency securities backed by the full faith and credit of the federal government.
  3. Question #3 of 84Question ID: 1279914
    Which of the following earn interest but don't pay interest?




    • B)
    • Explanation

    T-bills are sold at a discount and pay par at maturity. The difference between the discounted price and par is considered interest, but T-bills don't make interest payments.
  4. Question #4 of 84Question ID: 1268957
    Which of the following is not a T-bill maturity?




    • C)
    • Explanation

    Though the maximum maturity for T-bills is subject to change, they are always short-term instrumentsjQuery1124034996004160646454_1614393903014that is, one year or less??and are typically issued with maturities of 4 weeks, 13 weeks, 26 weeks, and at times, 52 weeks.
  5. Question #5 of 84Question ID: 1279917
    Regular way settlement for Treasury bonds is




    • A)
    • Explanation

    All U.S. government issues settle next business day (T+1).
  6. Question #6 of 84Question ID: 1268991
    All of the following are issuer transactions where the proceeds of the offering go to the issuing company except




    • C)
    • Explanation

    APOs, IPOs, and SPOs all result in funds going to the issuer and are, therefore, issuer transactions. A REPO is a money market instrument where money changes hands between the buyer and the seller.
  7. Question #7 of 84Question ID: 1268972
    Which of the following is true for U.S. Treasury-issued securities?




    • C)
    • Explanation

    T-bills are purchased at a discount, while T- bonds and T-note are purchased as a percentage of par. T-notes and T-bonds pay interest semiannually, but interest on T-bills is not paid until maturity (the difference between the discount paid and par value received).
  8. Question #8 of 84Question ID: 1268981
    A brokerage firm places U.S. Treasury notes and bonds in a trust at a bank and then issues securities collateralized by either the principal or interest payments those notes and bonds represent. These new securities the broker-dealer is offering are

    A)Treasury bills.
    B)collateralized obligations.
    C)Treasury receipts.
    D)Treasury STRIPS.
    • C)
    • Explanation

    Brokerage firms can create a type of bond known as a Treasury receipt from U.S. Treasury notes and bonds placed in trust at a bank. They then sell separate receipts against the principal and coupon payments the notes and bonds represent.
  9. Question #9 of 84Question ID: 1268968
    Treasury bond (T-bond) interest is stated as




    • B)
    • Explanation

    Like Treasury notes (T-notes), Treasury bonds (T-bonds) have interest stated as a percentage of par value. Example: Par value $1,000, with 4% interest equals $40 interest per year (0.04 ?? $1,000 = $40).
  10. Question #10 of 84Question ID: 1269005
    All of the following are true of negotiable commercial paper except




    • B)
    • Explanation

    Commercial paper is short-term unsecured debt issued by corporations having very good credit ratings. With a maximum 270-day maturity, it is considered a money market instrument.
  11. Question #11 of 84Question ID: 1269015
    Which of the following regarding federal funds is true?




    • C)
    • Explanation

    Federal funds are the excess amounts above the amount of a bank's deposits required to be held on reserve at the Federal Reserve member banks can lend these funds to one another to meet the FRB reserve requirements. These loans are very short term and, in most cases, are utilized overnight.
  12. Question #12 of 84Question ID: 1269018
    A customer has a short-term investment time horizon and a fairly certain need for funds she wishes to invest. Which of the following might meet those two investment objectives?

    A)Common stock
    B)Corporate bonds
    C)Government bonds
    D)Money market instruments
    • D)
    • Explanation

    With a short-term time horizon and an already identified need for the funds, the only choice of those listed here would be money market instruments with a fixed rate of return. Bonds are generally long-term instruments, and equity investments, such as common stock, do not offer a fixed rate of return and can be volatile.
  13. Question #13 of 84Question ID: 1279919
    Accrued interest on U.S. government bonds is calculated using




    • A)
    • Explanation

    Corporate and municipal bonds use the artificial 30-day, 360-day calendar, but government bonds use actual days.
  14. Question #14 of 84Question ID: 1268952
    Distinguishing by the issue's term to maturity for those securities issued by the U.S. federal government, which of the following is correct?




    • C)
    • Explanation

    Securities issued by the U.S. federal government, the shortest term to the longest term are bills, notes, and bonds.
  15. Question #15 of 84Question ID: 1268976
    For Treasury receipts and STRIPS, which of the following is true?




    • B)
    • Explanation

    Brokerage firms can create and issue a type of bond known as a Treasury receipt from U.S. Treasury notes and bonds. Issued by financial institutions, they are not backed by the U.S. government. However, the Treasury Department has its own version of receipts known as Treasury STRIPS. Issued by the Treasury Department, they are direct debt obligations of the U.S. government.
  16. Question #16 of 84Question ID: 1268967
    An investor holds a Treasury note with a stated interest of 6%. The investor will receive




    • B)
    • Explanation

    Treasury note (T-note) annual interest is stated as a percentage of par value ($1,000) and is paid in semiannual payments. Therefore, a 6% T-note pays $60 per year in two payments of $30 each.
  17. Question #17 of 84Question ID: 1268964
    Debt instruments put up for auction by the U.S. Treasury Department that offer intermediate maturities best describes




    • C)
    • Explanation

    Treasury notes (T-notes) are the intermediate maturity (2?C10 years) government-issued debt instruments. T-bills are short term (less than one year), and T-bonds are long term (10 years or more). Anticipation notes are short-term municipal-issued revenue notes.
  18. Question #18 of 84Question ID: 1279920
    T-bills are the U.S. government's




    • D)
    • Explanation

    T-bills have a maximum maturity of 52 weeks (one year) by law.
  19. Question #19 of 84Question ID: 1279923
    Of the following government-sponsored entities, which is backed by the full faith and credit of the U.S. government?




    • A)
    • Explanation

    FNMA and FHLMC are backed by the implied backing but not full faith and credit.
  20. Question #20 of 84Question ID: 1268985
    List the following Treasury securities from the longest to the shortest maturities.




    • B)
    • Explanation

    U.S. Treasury bonds are offered with the longest maturity. T-notes are intermediate length, followed by T-bills, which mature in 52 weeks or less.
  21. Question #21 of 84Question ID: 1269021
    A financial institution, in order to raise cash on a short-term basis, sells some of the securities it owns, with an agreement to buy them back at a later date at a slightly higher price. This is known as

    A)a reverse transaction.
    B)a promissory note.
    C)a repurchase agreement.
    D)a banker's acceptance.
    • C)
    • Explanation

    A repurchase (repo) agreement is one where a financial institution, such as a bank or a broker-dealer, raises cash by temporarily selling some of the securities it holds with an agreement to buy back the securities at a later date at a slightly higher price. Hence, agreement to do a transaction and then reverse the transaction in the future.
  22. Question #22 of 84Question ID: 1268986
    Treasury bills (T-bills) are




    • A)
    • Explanation

    Treasury bills are short-term debt obligations of the U.S. government issued weekly.
  23. Question #23 of 84Question ID: 1279922
    T-bonds are the U.S. government's




    • D)
    • Explanation

    T-bonds have a maturity in excess of 10 years when issued.
  24. Question #24 of 84Question ID: 1268997
    It would be expected that a repurchase (repo) agreement contract would include




    • A)
    • Explanation

    A repurchase (repo) agreement contract would include the repurchase price (the price that the securities initially sold would be bought back at) and the maturity date (the date that the initial sale would be reversed). The return would be the difference between the initial sale price and the repurchase price.
  25. Question #25 of 84Question ID: 1269020
    With money market securities, the risks are

    lack of liquidity.
    a lower return than with longer-term instruments.
    relative safety compared with other longer-term debt instruments.
    the potential reinvestment of principal at different rates over short periods of time.
    A)I and IV
    B)II and III
    C)I and III
    D)II and IV
    • D)
    • Explanation

    Because of their short-term maturities, money market instruments are relatively liquid and safe compared with other debt securities. These are considered advantages. The risks, however, would be lower returns (a trade-off for the safety) and potentially having to reinvest one's funds at a different rate each time the instrument matures (short intervals). In this light, not only is income minimal, but it will fluctuate with each new instrument purchased.
  26. Question #26 of 84Question ID: 1269011
    An unsecured promissory note issued by a bank that can be traded in the secondary market is known as




    • B)
    • Explanation

    Corporations issue unsecured promissory notes known as commercial or prime paper. When a bank issues an unsecured promissory note, it is known as a negotiable CD.
  27. Question #27 of 84Question ID: 1268953
    U.S. government securities are issued by




    • D)
    • Explanation

    All U.S. government securities issued by the U.S. Treasury are in book-entry form with no paper certificates.
  28. Question #28 of 84Question ID: 1268950
    Securities issued by the U.S. federal government are classified as




    • B)
    • Explanation

    Securities issued by the U.S. federal government are classified as bills, notes, and bonds that distinguish each issue's term to maturity (short, intermediate, and long term).
  29. Question #29 of 84Question ID: 1269014
    A Federal Reserve member bank's deposits in excess of the amount required to be on reserve are known as

    A)prime funds.
    B)promissory funds.
    C)jumbo funds.
    D)federal funds.
    • D)
    • Explanation

    The Federal Reserve Bank (FRB) mandates how much money its member banks must keep on reserve at the Federal Reserve. Any deposits in excess of the required amount are known as federal funds.
  30. Question #30 of 84Question ID: 1279915
    All of the following pay interest except




    • D)
    • Explanation

    T-bills are sold at a discount and pay par at maturity. The difference between the discounted price and par is considered interest, but T-bills don't make interest payments.
  31. Question #31 of 84Question ID: 1269002
    Which of the following securities is most often used to fund international trade?




    • C)
    • Explanation

    BAs are widely used in international trade for payments that are due for a future shipment and delivery of goods. For example, a Brazilian shoe manufacturer would receive a BA from a U.S. retailer for a guaranteed future payment when the shoes arrive in the United States. The manufacturer may ship its product knowing that the BA is guaranteed by a commercial bank. BAs are negotiable and freely traded in the money markets at a discount.
  32. Question #32 of 84Question ID: 1269012
    Being secured by no physical asset and backed only by a bank's good faith and credit, a bank's promise to pay principal and interest can be evidenced in which of the following securities that are traded in the secondary market?




    • D)
    • Explanation

    A negotiable CD is an unsecured money market instrument issued by banks. Negotiable means that it can be traded in the secondary market and unsecured means that it is backed only by a promise to pay??a bank's good faith and credit.
  33. Question #33 of 84Question ID: 1268995
    With money market securities held in one's portfolio, relative to other, longer-term debt securities, an investor should expect




    • A)
    • Explanation

    Because of their short-term maturities, money market securities are considered highly liquid and provide a relatively high degree of safety. In return for the safety, investors forgo a higher return for the lower returns generally associated with money market securities.
  34. Question #34 of 84Question ID: 1268977
    Which of the following is a debt instrument that pays no periodic interest?




    • C)
    • Explanation

    STRIPS are Treasury bonds with the coupons removed. With no coupons, STRIPS do not make regular interest payments. Instead, they are sold at a deep discount and mature at par value.
  35. Question #35 of 84Question ID: 1269017
    Money market instruments can be associated with all of the following except




    • B)
    • Explanation

    Money market instruments are highly liquid, short-term debt securities. The short time to maturity makes them less volatile and relatively safe, suitable to meet short-term investment horizons. In return for the safety, investors sacrifice high potential yields for low yields.
  36. Question #36 of 84Question ID: 1269019
    Your client has a long-term investment time horizon and is willing to accept some risk to achieve a better rate of return. Of the following, which would be the least suitable recommendation?




    • B)
    • Explanation

    Given the long-term investment time horizon and the willingness to accept some risk to earn better returns, the lease suitable recommendations would be short-term money market instruments, such as T-bills and negotiable CDs where the trade-off for safety is return.
  37. Question #37 of 84Question ID: 1268992
    Which of the following regarding capital and money markets is true?




    • C)
    • Explanation

    The capital market serves as a source of intermediate to long-term financing. The money market, on the other hand, provides short-term financing.
  38. Question #38 of 84Question ID: 1269006
    Commercial paper is




    • D)
    • Explanation

    Issued by corporations, commercial paper, also known as prime paper or promissory notes, are unsecured money market instruments with maximum maturities of 270 days (nine months).
  39. Question #39 of 84Question ID: 1268965
    T-notes pay interest




    • A)
    • Explanation

    Treasury notes (T-notes) and bonds (T-bonds) pay interest on a semiannual basis.
  40. Question #40 of 84Question ID: 1268948
    The U.S. federal government is the nation's




    • D)
    • Explanation

    The federal government is the nation's largest borrower, as well as the best credit risk. Securities issued by the U.S. government are backed by its full faith and credit. There is no stronger backing than that of the U.S. federal government.
  41. Question #41 of 84Question ID: 1268963
    U.S. Treasury notes are U.S. government-issued




    • A)
    • Explanation

    Treasury notes (T-notes) are U.S. government-issued intermediate-term debt securities having maturities of 2?C10 years.
  42. Question #42 of 84Question ID: 1268958
    Treasury bills pay




    • D)
    • Explanation

    Treasury bills (T-bills) are the only Treasury security issued at a discount to par value. At maturity, par value is received. The difference between what was paid and the par value received would be considered the interest income.
  43. Question #43 of 84Question ID: 1268984
    Which of the following are securities representing other securities held on deposit with a trustee where the principal and interest payments have been separated?




    • D)
    • Explanation

    Treasury receipts or STRIPS can represent U.S. T-bonds and notes held on deposit at a bank where essentially the coupon interest payments have been separated from the principal. When the Treasury Department does this, the resulting new issues are known as Treasury STRIPS, and when broker-dealers do this, the resulting new issues are known as Treasury receipts.
  44. Question #44 of 84Question ID: 1279921
    T-notes are the U.S. government's




    • B)
    • Explanation

    T-notes have maturities of 2?C10 years when issued. The 10-year T-note yield is an important benchmark for interest rates.
  45. Question #45 of 84Question ID: 1268996
    Money market securities can be associated with which of the following characteristics?




    • A)
    • Explanation

    Money market securities have short-term maturities. With little time left to default, they are considered to be highly liquid and, therefore, relatively safe. Safety or less risk equates to lower returns. Typically issued at a discount and maturing at face value, they generally make no regular interest payments. The difference between the discounted purchase price and the face value received at maturity represents their return.
  46. Question #46 of 84Question ID: 1268978
    Each of the following makes regular interest payments except




    • D)
    • Explanation

    Treasury STRIPS have the coupons removed and therefore do not make regular interest payments. Each of the remaining answer choices pays interest on a semiannual basis.
  47. Question #47 of 84Question ID: 1268959
    An investor purchases a T-bill for $9,925 that will mature at $10,000. The difference between the $9,925 paid and the $10,000 that will be received is




    • A)
    • Explanation

    T-bills are purchased at a discount to par. In this case, it is bought at $9,925, which is a $75 discount to the $10,000 par value to be received at maturity. Debt instruments pay interest not dividends, and the $75 difference between what was paid and what will be received is considered the interest paid on the T-bill at maturity.
  48. Question #48 of 84Question ID: 1269003
    Banker's acceptances are




    • A)
    • Explanation

    Used by corporations to finance international (foreign) trade, BAs are issued by banks to corporations. They are considered money market instruments because of their short-term maturities, generally no longer than 270 days (9 months).
  49. Question #49 of 84Question ID: 1268969
    An investor holding T-bonds will receive interest payments




    • D)
    • Explanation

    Treasury bonds (T-bonds) and notes (T-notes) pay interest on a semiannual basis.
  50. Question #50 of 84Question ID: 1268982
    Treasury receipts are backed by




    • A)
    • Explanation

    Treasury receipts are issued by broker-dealers. Although Treasury securities (T-notes and bonds) are held in trust at a bank and collateralize the Treasury receipts, unlike Treasury securities backed by the U.S. government, these Treasury receipts can only be backed by their issuer, the issuing broker-dealer.
  51. Question #51 of 84Question ID: 1268956
    For Treasury bills, which of the following are true?

    T-bills are issued at a discount to par.
    T-bills have maturities of 1?C10 years
    Most T-bill issues are callable and convertible.
    T-bills are a direct obligation of the U.S. government.



    • A)
    • Explanation

    T-bills are issued at a discount to par, are six months or less to maturity, and are a direct obligation of the U.S. government. Callable and convertible features are those that should be associated with corporate issues not government issues.
  52. Question #52 of 84Question ID: 1268994
    Money market debt instruments typically have maturities of




    • D)
    • Explanation

    Money market debt instruments typically have maturities of one year or less. Generally, securities with maturities of 1?C10 years are considered intermediate term and those with 10 years or more to maturity are long term.
  53. Question #53 of 84Question ID: 1269000
    Money market instruments guaranteed by a bank that are used to provide capital for international trade are called




    • D)
    • Explanation

    BAs provide short-term financing for importers and exporters.
  54. Question #54 of 84Question ID: 1268951
    In order to meet federal budget needs, the types and quantity of government securities to be issued are determined by




    • C)
    • Explanation

    It is the U.S. Treasury Department that determines the types and quantities of government securities to be issued each week in order to accommodate budgetary needs. At the time of issue, the Federal Reserve Board acts as the Treasury Departments agent.
  55. Question #55 of 84Question ID: 1279916
    Regular way settlement for Treasury notes is




    • A)
    • Explanation

    All U.S. government issues settle next business day (T+1).
  56. Question #56 of 84Question ID: 1268980
    Which of the following statements regarding Treasury receipts are true?

    Interest is paid annually.
    Interest is paid at maturity
    They are sold at a discount.
    They are sold at par.



    • A)
    • Explanation

    Treasury receipts are issued at a discount and redeemed at par, and the difference represents the interest earned, which isn't received until maturity.
  57. Question #57 of 84Question ID: 1268971
    T-bonds and T-notes




    • B)
    • Explanation

    Both Treasury notes and bonds are priced as a percentage of par. Interest on these is paid semiannually. Comparatively, T-bills are priced at a discount to par with the interest not paid until maturity (the difference between the discount paid and par value received).
  58. Question #58 of 84Question ID: 1268974
    Treasury bonds pay interest




    • D)
    • Explanation

    Treasury bonds (T-bonds) and notes (T-notes) both pay interest semiannually and mature at par value.
  59. Question #59 of 84Question ID: 1269009
    Negotiable jumbo CDs are characterized by all of the following except




    • D)
    • Explanation

    Negotiable jumbo CDs are issued in denominations of $100,000?C$1 million and trade in the secondary market. Most jumbo CDs are issued with maturities of one year or less. These CDs are unsecured promissory notes backed only by the credit standing of the issuing institution.
  60. Question #60 of 84Question ID: 1268989
    The United States Congress has authorized all of the following enterprises to issue securities except




    • C)
    • Explanation

    In addition to U.S. Treasury securities, the U.S. Congress authorizes certain agencies of the federal government to issue debt securities. These would include GNMA, FNMA, and FHLM. The Federal Deposit Insurance Corporation (FDIC) does not issues securities but is set up to insure bank deposits in the event of bank failure.
  61. Question #61 of 84Question ID: 1269010
    Regarding CDs and negotiable CDs issued by banks,




    • A)
    • Explanation

    Banks issue and guarantee CDs with fixed interest rates. Some that can be traded in the secondary market are known as negotiable CDs. Only these negotiable CDs are considered money market instruments.
  62. Question #62 of 84Question ID: 1268962
    A new customer tells you that her objective is to incur little risk because she is anticipating a new home within the next 12 months. Which of the following would be a suitable recommendation?

    A)High-yield corporate bonds
    B)T-bills
    C)Growth stocks
    D)T-bonds
    • B)
    • Explanation

    The investor's time frame for needing the funds (within 12 months) and low-risk objective are the key factors to consider. With such a short time horizon, any equity investment involves too much risk, as does an investment in a high-yield bond fund (higher the yield, greater the risk to attain it). Of the choices, T-bills are the shortest fixed term and are issued by the U.S. government, entailing little to no risk.
  63. Question #63 of 84Question ID: 1268983
    Which of the following regarding Treasury STRIPS, receipts, bills, notes and bonds is true?




    • D)
    • Explanation

    The only commonality for all of these is that each matures at par. Only T-bills, receipts and STRIPS are sold at a discount to par. Only T-notes and bonds make semiannual interest payments, and though STRIPS, bills, notes, and bonds are all backed by the good faith and credit of the U.S. government, Treasury receipts issued by broker-dealers are not.
  64. Question #64 of 84Question ID: 1268988
    Which of the following is true regarding money market securities?




    • A)
    • Explanation

    Only T-bills, because they have maturities of one year or less, are considered money market securities at the time of issue. However, though issued with longer maturities, both T-notes and bonds are considered money market instruments once they have only a year left to maturity.
  65. Question #65 of 84Question ID: 1268970
    Treasury bonds mature in




    • C)
    • Explanation

    Treasury bonds (T-bonds) are the U.S. government's long-term debt instrument having maturities of 10 years and up to 30 years.
  66. Question #66 of 84Question ID: 1269013
    A bank issues and guarantees certificates of deposit, and those that are negotiable are considered money market instruments. What makes a CD negotiable?

    A)Backing by the banks good faith and credit
    B)Short-term maturity
    C)Secondary market trading
    D)A fixed interest rate
    • C)
    • Explanation

    While all of these are characteristics of negotiable certificates of deposit issued by banks, it is the ability to trade the CDs in the secondary market that makes them negotiable.
  67. Question #67 of 84Question ID: 1268966
    Treasury note (T-note) interest is stated as




    • D)
    • Explanation

    Like Treasury bonds (T-bonds), Treasury notes (T-notes) have interest stated as a percentage of par value. Example: Par value $1,000, with 8% interest, equals $80 interest per year (0.08 ?? $1,000 = $80).
  68. Question #68 of 84Question ID: 1268998
    A broker-dealer has engaged in a reverse repurchase (repo) agreement. How was this done?

    A)An initial purchase is followed by a sale later, at a lower price.
    B)An initial purchase is followed by a sale later, at a higher price.
    C)An initial sale is followed by a purchase later, at a lower price.
    D)An initial sale is followed by a purchase later, at a higher price.
    • B)
    • Explanation

    In a reverse repurchase (repo) agreement a dealer agrees to buy securities from an investor and sell them back later at a higher price. In other words, the reverse of a repo agreement.
  69. Question #69 of 84Question ID: 1268960
    Treasury bills (T-bills) are




    • D)
    • Explanation

    T-bills, the shortest-term government-issued securities, are not issued with a stated rate of return. Instead they are issued at a discount to par rather than face value, and they mature at par. The difference between the discounted price paid and the par value received at maturity is considered the interest.
  70. Question #70 of 84Question ID: 1268993
    Money market instruments are typically




    • A)
    • Explanation

    Money market instruments are fixed-income (debt) securities with short-term maturities, typically one year or less.
  71. Question #71 of 84Question ID: 1268954
    Which of the following shows Treasury bills, Treasury bonds, and Treasury notes listed in ascending order of maturity?




    • B)
    • Explanation

    Treasury bills have a maturity of less than one year, Treasury notes mature in 1?C10 years, and Treasury bonds mature in 10 years or more. Therefore, in ascending order, short-term to long-term, they are T-bills, T-notes, T-bonds.
  72. Question #72 of 84Question ID: 1269004
    Promissory notes are a form of




    • D)
    • Explanation

    Corporations issue short-term, unsecured commercial paper, known as promissory notes. The proceeds from these notes are generally used to fund such items as pending accounts receivable and seasonal inventory gluts.
  73. Question #73 of 84Question ID: 1269016
    Federal funds represent




    • D)
    • Explanation

    The FRB mandates how much money its member banks must keep on reserve at the Federal Reserve. Any deposits in excess of the required amount are known as federal funds.
  74. Question #74 of 84Question ID: 1268949
    Securities issued by the U.S. government are backed by




    • A)
    • Explanation

    Securities issued by the U.S. government are backed by its full faith and credit. The promise to pay is based on the federal government's power to tax the people, as well as to print currency when it needs to.
  75. Question #75 of 84Question ID: 1268955
    Treasury bills




    • D)
    • Explanation

    Treasury bills are always issued at a discount, without a stated interest rate. Because of their short-term maturities, they have the lowest interest-rate risk for Treasury securities, not the highest. They are issued with maturities of 4, 13, 26, and 52 weeks.
  76. Question #76 of 84Question ID: 1269007
    A corporation wanting to raise cash to finance accounts receivable and seasonal inventory needs is likely to issue any of the following except

    A)promissory notes.
    B)commercial paper.
    C)prime paper.
    D)bonds.
    • D)
    • Explanation

    To raise cash for short-term needs, such as accommodating accounts receivable or inventory needs, corporations would issue commercial paper (also known as prime paper or promissory notes). Bonds should always be associated with long-term debt financing.
  77. Question #77 of 84Question ID: 1268973
    Which of the following is true for debt instruments issued by the U.S. Treasury?




    • B)
    • Explanation

    U.S. Treasury-issued debt instruments are all issued in book-entry form. Only T-notes and bonds are priced as a percentage of par, have interest stated as a percentage of par, and pay semiannual interest payments. T-bills are issued at a discount, have no stated interest rate, and do not pay interest until maturity.
  78. Question #78 of 84Question ID: 1268975
    All of the following securities are backed by the full faith and credit of the U.S. government except




    • B)
    • Explanation

    Treasury receipts are issued by broker-dealers, and they are backed by the good faith and credit of those that issue them. Treasury STRIPS are the U.S. Treasury Department's version of these, and therefore they are backed in full by the U.S. government. Treasury bills, notes, and bonds are backed in full by the U.S. government.
  79. Question #79 of 84Question ID: 1279918
    T-bills are delivered in




    • C)
    • Explanation

    All U.S. government issues are delivered in book entry.
  80. Question #80 of 84Question ID: 1268987
    Which of the following are considered money market securities at the time of issue?




    • C)
    • Explanation

    Money market securities are short-term (one year or less) securities at the time of issue. Of the choices listed, only Treasury bills meet the short-term criteria at the time of issue.
  81. Question #81 of 84Question ID: 1268961
    T-bills are issued (auctioned) by the U.S. Treasury Department how often?




    • D)
    • Explanation

    Treasury bills (T-bills) are issued (auctioned) by the U.S. Treasury weekly.
  82. Question #82 of 84Question ID: 1268979
    U.S. government deposits securities with a trustee against which certificates are sold representing principal only with no regular interest payments. These are known as




    • D)
    • Explanation

    When the U.S. government deposits securities with a trustee, against which it issues certificates representing principal payments only, and no regular interest payments, these are known as Treasury STRIPS.
  83. Question #83 of 84Question ID: 1268999
    Repurchase agreements and reverse repurchase agreements are




    • D)
    • Explanation

    Repurchase (repo) agreements and reverse repurchase agreements are short-term debt securities and are, therefore, a type of money market instrument.
  84. Question #84 of 84Question ID: 1269008
    Commercial paper issued by corporations can have maturities as short or as long as




    • D)
    • Explanation

    Commercial paper is issued by corporations to meet short-term cash needs. A form of money market instrument, it can have maturities as short as one day (literally overnight) or as long as 270 days (9 months).
Author
NancyShi
ID
354702
Card Set
P1u2.3
Description
Part1 Unit 2-3
Updated