27.Which of the following statements are true? Statement I. Money markets are used to facilitate the transfer of short-term funds from individuals, corporations, or governments with excess funds to those with deficient funds. Even investors who focus on long-term securities tend to hold some money market securities because this enables them to maintain liquidity. Statement II. Financial institutions manage their liquidity by participating in money markets. They may issue money market securities when they experience cash shortages and need to boost liquidity. They can also sell holdings of money market securities to obtain cash. Statement III. The value of a money market security represents the future value of the present cash flows generated by that security. Since money market securities represent debt, their expected cash flows are typically known. Statement IV. The pricing of money market securities changes in response to a shift in the required rate of return by investors. The required rate of return changes in response to interest rate movements or to a shift in the security’s credit risk. a. I,II,III b. I,II,IV c. I,III,IV d. I,II,III,IV
27.Which of the following statements are true? Statement I. Money markets are used to facilitate the transfer of short-term funds from individuals, corporations, or governments with excess funds to those with deficient funds. Even investors who focus on long-term securities tend to hold some money market securities because this enables them to maintain liquidity. Statement II. Financial institutions manage their liquidity by participating in money markets. They may issue money market securities when they experience cash shortages and need to boost liquidity. They can also sell holdings of money market securities to obtain cash. Statement III. The value of a money market security represents the future value of the present cash flows generated by that security. Since money market securities represent debt, their expected cash flows are typically known. Statement IV. The pricing of money market securities changes in response to a shift in the required rate of return by investors. The required rate of return changes in response to interest rate movements or to a shift in the security’s credit risk. a. I,II,III b. I,II,IV c. I,III,IV d. I,II,III,IV
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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27.Which of the following statements are true?
Statement I. Money markets are used to facilitate the transfer of short-term funds from individuals, corporations, or governments with excess funds to those with deficient funds. Even investors who focus on long-term securities tend to hold somemoney market securities because this enables them to maintain liquidity.
Statement II.Financial institutions manage their liquidity by participating in money markets. They may issue money market securities when they experience cash shortages and need to boost liquidity. They can also sell holdings of money market securities to obtain cash.
Statement III. The value of a money market security represents thefuture value of the present cash flows generated by that security. Since money market securities represent debt, their expected cash flows are typically known.
Statement IV. The pricing of money market securities changes in response to a shift in the requiredrate of return by investors. The required rate of return changes in response to interest rate movements or to a shift in the security’s credit risk.
Statement I. Money markets are used to facilitate the transfer of short-term funds from individuals, corporations, or governments with excess funds to those with deficient funds. Even investors who focus on long-term securities tend to hold some
Statement II.
Statement III. The value of a money market security represents the
Statement IV. The pricing of money market securities changes in response to a shift in the required
a. I,II,III
b. I,II,IV
c. I,III,IV
d. I,II,III,IV
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