Question

Money market instruments

(a) are usually sold in large denominations.

(b) have low default risk.

(c) mature in one year or less.

(d) are characterized by all of the above.

(e) are characterized by only (A) and (B) of the above.

justify answer

Answer 1

The correct answer is Option D

Money Market instruments refers to the short term debt instruments which matures in less than 1 year. These instruments are used by the company to maintain the necessary liquidity or for many other reasons, Also, they are sold in large volume and these instruments include Commercial paper, Certificate of Deposits,etc.

As Money market instruments are for short term duration it has lower default risk because they can be easily liquidated.