is NOT a characteristic of a money market instrument. A. illiquidity B. short maturity C. low risk D. none of above

Q: 19. Investors in the secondary market seek A. Low returns on long-term investment B. High returns on…

A: A secondary market is a market in which buying and selling of securities take place. In this, those…

Q: Active secondary markets

A: Secondary Market: Secondary market is the market where the securities are bought or sold without the…

Q: What differences between the daily market valuation of a traditional security and the valuation…

A: There is need of proper valuation of security there many methods of valuation.

Q: Which of the following statements is correct? A.) A flat yield curve occurs when the…

A: Options given in the question:A.) A flat yield curve occurs when the yield-to-maturity is virtually…

Q: An inflation hedge is an asset that increases in value at a rate equal to or greater than the rate…

A: Hedging is technique of reducing risk. This reduction in risk also results typically in a decrease…

Q: 1. A type of risk that relates to the changes in the market value of commodities that diminishes the…

A: (Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: Assuming that we are not able to accurately predict cash flows , generally decreased risk is thought…

A: Cash flow at risk at risk tells us how changes in market factors can change the future cash flows.…

Q: Is it reasonable to ignore IDIOSYNCRATIC RISK and care only about MARKET (SYSTEMIC) risk? What about…

A: Definitions  Idiosyncratic risk : In simple words, idiosyncratic risk can be understood as the risk…

Q: Explain whether you agree or disagree with the following statement:

A: Interest rate risk is the risk arising from the fluctuations in the interest rates. It depends…

Q: Two statements are given below about Marketable Securities: Statement 1: Marketable securities does…

A: Solution:- Marketable securities are the short term form of financial instrument to invest in, such…

Q: Unsystematic risk is * a.the risk associated with movements in securities prices B.higher when…

A: Risk is referred as uncertainty or loss. Financial risk is referred as the variability of actual…

Q: Which of the following is not true with Money Market? Select one: a. Deals in short term funds b.…

A: Money market is a market wherein short term instruments are traded and only those investors who are…

Q: Exchange-traded funds are popular investments that are easy to sell and have the potential to earn…

A: Exchange-traded funds are those that offer comparable risk and return and track a certain exchange…

Q: cash flow frequ ot the same, one W oved: the period

A: Period interest rate approach : In simple words, the period interest rate approach refers to the…

Q: 26. Real interest rate and real cash flows do not include A. equity effects B. debt effects C.…

A: Interest rate refers to the rate at which one party agrees to lend and the other party agrees to…

Q: explain the statement"The money market is neccessary but not sufficinet for the liduiidity of…

A: Money market is an instrument used to provide flow of short term funds in the economy. It consist of…

Q: 13. Securities with less predictable prices and have longer maturity time is considered as _____. A.…

A: Securities refer to the capital market instruments that facilitate the flow of money in the market…

Q: Relying solely on using a traditional spot cash market is a relatively high risk means to pricing a…

A: Traditional spot cash means future traded in the same exchange and same date. Pricing  a commodity…

Q: Duration is a measure of interest rates risk. Select one: True False

A: The factors that can impact the bond duration are the time to maturity and the coupon rates. Longer…

Q: Marketable securities are also considered as liquid assets but not as liquid as cash. * Right O…

A: Correct answer: Right. Cash and the Marketable securities both are types of liquid assets. A liquid…

Q: Which of the following would likely be most successful at preventing off-balance-sheet financing?…

A: Out of the available choices, reporting long-term liabilities at fair value is likely to be the most…

Q: The so-called ``flight to quality'', which happens during a financial crisis, causes the risk…

A: The objective of the question is to understand the impact of a 'flight to quality' on the risk…

Q: Which of the following is incorrect regarding margin trading? O a. The relationship between security…

A: Margin trading (MT) is the benefit which is provided by the trader to the investors to purchase…

Q: Volatility is a situation when the prices of financial instruments are potentially stable, and they…

A: Volatility is statistically measurement of movement of stock price.

Q: Securitized paper

A: When the outstanding bonds are pooled together to form a new category of product and then is traded…

Q: Value forward agreements normally have adjustments dependent on the price of the equity, worth of…

A: The value of the forward agreement is an agreement that has already specified its assets to be…

Q: TRUE OR FALSE: Assuming an efficient market, two financial securities cannot have the same risk and…

A: The efficient market hypothesis states that information is quickly and accurately reflected in asset…

Q: Marketable securities are liquid financial instruments that can be quickly converted into cash at a…

A: Cash and cash equivalents are the most liquid current asset items included in quick assets, while…

Q: Market neutral bets can result in ______ volatility because hedge funds use ______.  Group of answer…

A: Market-neutral bets or strategy is used to gain higher returns in all market conditions or…

Q: Derivatives are obtained to be used as hedging instrument to manage some kind of risk. for…

A: Derivatives are the type of instrument which is used for financial asset, liability or trading…

Q: Which of the following statements is not correct? Select one: а. The duration of a consol bond is…

A: a) Duration of the Consol Bond /Perpetuity has no maturity =1+yy years where ,y= Coupon rate of the…

Q: Typically, short-term interest rates: А. are more volatile than long-term interest rates В. are less…

A: Short-term interest rates are usually averages of daily rates, calculated as a percentage. The…

Q: Which of the following statement is true a. Gold generally provides a hedge against inflation over…

A: A capital market is a market where the long-term securities and equity securities are traded.…

Q: Liquidity means that the firm has Select one: a. Adequate cash. b. None of the options . c. Less…

A: Liquidity: It implies the ability or ease with which the company's assets can be translated into…

Q: What is meant by coupon stripping in the Treasury market?

A: Coupon stripping is the separation of an instant bond's periodic interest bills from its foremost…

Q: In considering the market-based approach to measuring credit risk, choose all statements that are…

A: Credit risk is the risk of a loss coming from a borrower's failure to repay a loan or meet…

Q: do not earn

A: Non- Banking Financial Institutions - NBFCs are financial institutions that provide bank-related…

Q: portant topic that usually only economists observe.

A: Basically, risk the executives happens when an investor or fund manager investigates and endeavors…

Q: Q.Regarding the concept of opportunity cost, one affirmation is false. Which one is it? a. is not…

A: Answer: a) Regarding the concept of opportunity cost, one affirmation is false. The false statement…

Q: Money market does not have any role in the development of capital market

A: Money market is a market which deals in short term securities like treasury bills, bills of…

Q: Which of the following are characteristics of money market securities? I. Long term maturities.…

A: Money market securities refers to interest bearing securities that are highly liquid and highly…

Q: Which one of the following elements of credit risk does not comprise Standalone Risk Default…

A: Standalone risk is the creation of risk by the specified division, project, or asset. It can be…

Loanable Funds Theory

The loanable funds theory is a neoclassical theory that determines the interest rate where the demand for loanable investments and supply of loanable funds intersect. To determine the interest rate, this theory employs linear regression and a demand curve. At the equilibrium point, demand for borrowings and demand for the issuance of borrowing funds are inextricably linked. This point of equilibrium should equalize demand and the supply of money available for borrowing.