The evaluation of the listed investments. Introduction: Emergency savings fund is that fund that is made to cover the expenses of at least first 3 months that includes covering of the living expenses. The funds that will be taken in emergency savings funds should be highly liquid and should be converted into cash quickly.

Question

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Answer 1

Question

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

Chapter 11, Problem 1PA

Summary Introduction

To discuss:

The evaluation of the listed investments.

Introduction:

Emergency savings fund is that fund that is made to cover the expenses of at least first 3 months that includes covering of the living expenses. The funds that will be taken in emergency savings funds should be highly liquid and should be converted into cash quickly.

Expert Solution & Answer

Explanation of Solution

a.

Certificate of deposit certificates of deposit are the deposits that are purchased by large institutional investors and cannot be cashed before the maturity arises and have a term of 1 year and 5 years.
The chances of losses in investment in certificate of deposit are withdrawal of the investment before maturity period.
Certificate of deposit has a clause that prohibits users to withdraw cash before maturity, so it is not a highly liquid investment.

b.

Treasury bills are that short term investment that are issued by the central government and is a promissory note to raise the funds from the central banks.
Investing in treasury bills is a bit risky as the rates vary according to the fluctuation of interest rate.
Investment in Treasury bill is highly liquid.

c.

Investment in gold and silver coins is risky and provides high rate of truen most of the times.
Investment in gold and silver coins is less liquid as the right buyer is not found at the right time.
The price of such commodities such as gold and service fluctuates according to the demand in market.

d.

Energy stocks are the shares of the company that produces or mines sources of energy and is highly volatile and risky.
Energy stocks are liquids as they can be sold at any time on the market price that has been of that particular stock at the particular time.

e.

Money market mutual funds are those type of mutual funds that invest the money in the short term bills and commercial deposits.
The volatility of investment in money market mutual funds is very low as the money is invested in short term securities.
It is highly liquid asset.

Conclusion

The person should invest in the short term investments that are more liquid and less risky.

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Answer 2

Question

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

Chapter 11, Problem 1PA

Summary Introduction

To discuss:

The evaluation of the listed investments.

Introduction:

Emergency savings fund is that fund that is made to cover the expenses of at least first 3 months that includes covering of the living expenses. The funds that will be taken in emergency savings funds should be highly liquid and should be converted into cash quickly.

Expert Solution & Answer

Explanation of Solution

a.

Certificate of deposit certificates of deposit are the deposits that are purchased by large institutional investors and cannot be cashed before the maturity arises and have a term of 1 year and 5 years.
The chances of losses in investment in certificate of deposit are withdrawal of the investment before maturity period.
Certificate of deposit has a clause that prohibits users to withdraw cash before maturity, so it is not a highly liquid investment.

b.

Treasury bills are that short term investment that are issued by the central government and is a promissory note to raise the funds from the central banks.
Investing in treasury bills is a bit risky as the rates vary according to the fluctuation of interest rate.
Investment in Treasury bill is highly liquid.

c.

Investment in gold and silver coins is risky and provides high rate of truen most of the times.
Investment in gold and silver coins is less liquid as the right buyer is not found at the right time.
The price of such commodities such as gold and service fluctuates according to the demand in market.

d.

Energy stocks are the shares of the company that produces or mines sources of energy and is highly volatile and risky.
Energy stocks are liquids as they can be sold at any time on the market price that has been of that particular stock at the particular time.

e.

Money market mutual funds are those type of mutual funds that invest the money in the short term bills and commercial deposits.
The volatility of investment in money market mutual funds is very low as the money is invested in short term securities.
It is highly liquid asset.

Conclusion

The person should invest in the short term investments that are more liquid and less risky.

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Answer 3

Question

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

Chapter 11, Problem 1PA

Summary Introduction

To discuss:

The evaluation of the listed investments.

Introduction:

Emergency savings fund is that fund that is made to cover the expenses of at least first 3 months that includes covering of the living expenses. The funds that will be taken in emergency savings funds should be highly liquid and should be converted into cash quickly.

Expert Solution & Answer

Explanation of Solution

a.

Certificate of deposit certificates of deposit are the deposits that are purchased by large institutional investors and cannot be cashed before the maturity arises and have a term of 1 year and 5 years.
The chances of losses in investment in certificate of deposit are withdrawal of the investment before maturity period.
Certificate of deposit has a clause that prohibits users to withdraw cash before maturity, so it is not a highly liquid investment.

b.

Treasury bills are that short term investment that are issued by the central government and is a promissory note to raise the funds from the central banks.
Investing in treasury bills is a bit risky as the rates vary according to the fluctuation of interest rate.
Investment in Treasury bill is highly liquid.

c.

Investment in gold and silver coins is risky and provides high rate of truen most of the times.
Investment in gold and silver coins is less liquid as the right buyer is not found at the right time.
The price of such commodities such as gold and service fluctuates according to the demand in market.

d.

Energy stocks are the shares of the company that produces or mines sources of energy and is highly volatile and risky.
Energy stocks are liquids as they can be sold at any time on the market price that has been of that particular stock at the particular time.

e.

Money market mutual funds are those type of mutual funds that invest the money in the short term bills and commercial deposits.
The volatility of investment in money market mutual funds is very low as the money is invested in short term securities.
It is highly liquid asset.

Conclusion

The person should invest in the short term investments that are more liquid and less risky.

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Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

Chapter 11, Problem 1PA

Summary Introduction

To discuss:

The evaluation of the listed investments.

Introduction:

Emergency savings fund is that fund that is made to cover the expenses of at least first 3 months that includes covering of the living expenses. The funds that will be taken in emergency savings funds should be highly liquid and should be converted into cash quickly.

Expert Solution & Answer

Explanation of Solution

a.

Certificate of deposit certificates of deposit are the deposits that are purchased by large institutional investors and cannot be cashed before the maturity arises and have a term of 1 year and 5 years.
The chances of losses in investment in certificate of deposit are withdrawal of the investment before maturity period.
Certificate of deposit has a clause that prohibits users to withdraw cash before maturity, so it is not a highly liquid investment.

b.

Treasury bills are that short term investment that are issued by the central government and is a promissory note to raise the funds from the central banks.
Investing in treasury bills is a bit risky as the rates vary according to the fluctuation of interest rate.
Investment in Treasury bill is highly liquid.

c.

Investment in gold and silver coins is risky and provides high rate of truen most of the times.
Investment in gold and silver coins is less liquid as the right buyer is not found at the right time.
The price of such commodities such as gold and service fluctuates according to the demand in market.

d.

Energy stocks are the shares of the company that produces or mines sources of energy and is highly volatile and risky.
Energy stocks are liquids as they can be sold at any time on the market price that has been of that particular stock at the particular time.

e.

Money market mutual funds are those type of mutual funds that invest the money in the short term bills and commercial deposits.
The volatility of investment in money market mutual funds is very low as the money is invested in short term securities.
It is highly liquid asset.

Conclusion

The person should invest in the short term investments that are more liquid and less risky.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 11, Problem 1PA

Summary Introduction

To discuss:

The evaluation of the listed investments.

Introduction:

Emergency savings fund is that fund that is made to cover the expenses of at least first 3 months that includes covering of the living expenses. The funds that will be taken in emergency savings funds should be highly liquid and should be converted into cash quickly.

Expert Solution & Answer

Explanation of Solution

a.

Certificate of deposit certificates of deposit are the deposits that are purchased by large institutional investors and cannot be cashed before the maturity arises and have a term of 1 year and 5 years.
The chances of losses in investment in certificate of deposit are withdrawal of the investment before maturity period.
Certificate of deposit has a clause that prohibits users to withdraw cash before maturity, so it is not a highly liquid investment.

b.

Treasury bills are that short term investment that are issued by the central government and is a promissory note to raise the funds from the central banks.
Investing in treasury bills is a bit risky as the rates vary according to the fluctuation of interest rate.
Investment in Treasury bill is highly liquid.

c.

Investment in gold and silver coins is risky and provides high rate of truen most of the times.
Investment in gold and silver coins is less liquid as the right buyer is not found at the right time.
The price of such commodities such as gold and service fluctuates according to the demand in market.

d.

Energy stocks are the shares of the company that produces or mines sources of energy and is highly volatile and risky.
Energy stocks are liquids as they can be sold at any time on the market price that has been of that particular stock at the particular time.

e.

Money market mutual funds are those type of mutual funds that invest the money in the short term bills and commercial deposits.
The volatility of investment in money market mutual funds is very low as the money is invested in short term securities.
It is highly liquid asset.

Conclusion

The person should invest in the short term investments that are more liquid and less risky.

Answer 6

Chapter 11, Problem 1PA

Summary Introduction

To discuss:

The evaluation of the listed investments.

Introduction:

Emergency savings fund is that fund that is made to cover the expenses of at least first 3 months that includes covering of the living expenses. The funds that will be taken in emergency savings funds should be highly liquid and should be converted into cash quickly.

Expert Solution & Answer

Explanation of Solution

a.

Certificate of deposit certificates of deposit are the deposits that are purchased by large institutional investors and cannot be cashed before the maturity arises and have a term of 1 year and 5 years.
The chances of losses in investment in certificate of deposit are withdrawal of the investment before maturity period.
Certificate of deposit has a clause that prohibits users to withdraw cash before maturity, so it is not a highly liquid investment.

b.

Treasury bills are that short term investment that are issued by the central government and is a promissory note to raise the funds from the central banks.
Investing in treasury bills is a bit risky as the rates vary according to the fluctuation of interest rate.
Investment in Treasury bill is highly liquid.

c.

Investment in gold and silver coins is risky and provides high rate of truen most of the times.
Investment in gold and silver coins is less liquid as the right buyer is not found at the right time.
The price of such commodities such as gold and service fluctuates according to the demand in market.

d.

Energy stocks are the shares of the company that produces or mines sources of energy and is highly volatile and risky.
Energy stocks are liquids as they can be sold at any time on the market price that has been of that particular stock at the particular time.

e.

Money market mutual funds are those type of mutual funds that invest the money in the short term bills and commercial deposits.
The volatility of investment in money market mutual funds is very low as the money is invested in short term securities.
It is highly liquid asset.

Conclusion

The person should invest in the short term investments that are more liquid and less risky.

Answer 7

Chapter 11, Problem 1PA

Summary Introduction

To discuss:

The evaluation of the listed investments.

Introduction:

Emergency savings fund is that fund that is made to cover the expenses of at least first 3 months that includes covering of the living expenses. The funds that will be taken in emergency savings funds should be highly liquid and should be converted into cash quickly.

Answer 8

Expert Solution & Answer

Explanation of Solution

a.

Certificate of deposit certificates of deposit are the deposits that are purchased by large institutional investors and cannot be cashed before the maturity arises and have a term of 1 year and 5 years.
The chances of losses in investment in certificate of deposit are withdrawal of the investment before maturity period.
Certificate of deposit has a clause that prohibits users to withdraw cash before maturity, so it is not a highly liquid investment.

b.

Treasury bills are that short term investment that are issued by the central government and is a promissory note to raise the funds from the central banks.
Investing in treasury bills is a bit risky as the rates vary according to the fluctuation of interest rate.
Investment in Treasury bill is highly liquid.

c.

Investment in gold and silver coins is risky and provides high rate of truen most of the times.
Investment in gold and silver coins is less liquid as the right buyer is not found at the right time.
The price of such commodities such as gold and service fluctuates according to the demand in market.

d.

Energy stocks are the shares of the company that produces or mines sources of energy and is highly volatile and risky.
Energy stocks are liquids as they can be sold at any time on the market price that has been of that particular stock at the particular time.

e.

Money market mutual funds are those type of mutual funds that invest the money in the short term bills and commercial deposits.
The volatility of investment in money market mutual funds is very low as the money is invested in short term securities.
It is highly liquid asset.