1. Compare the risk of loss of full return of principal when investing in a commercial...

1. Compare the risk of loss of full return of principal when investing in a commercial paper, reverse repurchase agreement and treasury bills

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Expert Solution

The risk of loss of full return of principal is :

Least for Treasury Bills because they are issued by the US Treasury, and therefore are issued with the full faith and credit of the US Government.
Reverse repurchase agreements have higher risk than Treasury Bills because they are agreements with banks and financial institutions. However, their risk is lower than commercial paper because reverse repurchase agreements are done for very short-time periods
Commercial paper has the highest risk because they are issued by corporates, and have maturity upto 1 year

jeff jeffy answered 2 years ago

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