?2010CengageLearning.AllRightsReserved.ThiseditionisintendedforuseoutsideoftheU.S.only,withcontentthatmaybedifferentfromtheU.S.Edition.Maynotbescanned,copied,duplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.Chapter6MoneyMarkets1.SecuritieswithmaturitiesofoneyearorlessareclassifiedasA)capitalmarketinstruments.B)moneymarketinstruments.C)preferredstock.D)noneoftheaboveANSWER:B2.Whichofthefollowingisnotamoneymarketsecurity?A)TreasurybillB)negotiablecertificateofdepositC)commonstockD)federalfundsANSWER:C3.________aresoldatanauctionatadiscountfromparvalue.A)TreasurybillsB)RepurchaseagreementsC)Banker’sacceptancesD)CommercialpaperANSWER:A4.JarrodKing,aprivateinvestor,purchasesaTreasurybillwitha$10,000parvaluefor$9,645.Onehundreddayslater,JarrodsellstheT-billfor$9,719.WhatisJarrod’sexpectedannualizedyieldfromthistransaction?A)13.43percentB)2.78percentC)10.55percentD)2.80percentE)noneoftheaboveANSWER:D5.IfaninvestorbuysaT-billwitha90-daymaturityand$50,000parvaluefor$48,500andholdsittomaturity,whatistheannualizedyield?A)about13.4percentB)about12.5percentC)about11.3percentD)about11.6percentE)about10.7percent2?MoneyMarkets?2010CengageLearning.AllRightsReserved.ThiseditionisintendedforuseoutsideoftheU.S.only,withcontentthatmaybedifferentfromtheU.S.Edition.Maynotbescanned,copied,duplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.ANSWER:B6.AninvestorbuysaT-billwith180daystomaturityand$250,000parvaluefor$242,000.Heplanstosellitafter60days,andforecastsasellingpriceof$247,000atthattime.Whatistheannualizedyieldbasedonthisexpectation?A)about10.1percentB)about12.6percentC)about11.4percentD)about13.5percentE)about14.3percentANSWER:B7.Assumeinvestorsrequirea5percentannualizedreturnonasix-monthT-billwithaparvalueof$10,000.Thepriceinvestorswouldbewillingtopayis$________.A)10,000B)9,524C)9,756D)noneoftheaboveANSWER:C8.AnewlyissuedT-billwitha$10,000parvaluesellsfor$9,750,andhasa90-daymaturity.Whatisthediscount?A)10.26percentB)0.26percentC)$2,500D)10.00percentE)11.00percentANSWER:D9.Largecorporationstypicallymake___________bidsforT-billssotheycanpurchaselargeramounts.A)competitiveB)noncompetitiveC)verysmallD)noneoftheaboveANSWER:A10.Atanygiventime,theyieldoncommercialpaperis______theyieldonaT-billwiththesamematurity.A)slightlylessthanB)slightlyhigherthanC)equaltoD)AandBbothoccurwithaboutequalfrequencyANSWER:BMoneyMarkets?3?2010CengageLearning.AllRightsReserved.ThiseditionisintendedforuseoutsideoftheU.S.only,withcontentthatmaybedifferentfromtheU.S.Edition.Maynotbescanned,copied,duplicated,orpostedtoapubliclyaccessiblewebsite,inwholeorinpart.11.T-billsandcommercialpaperaresoldA)withastatedcouponrate.B)atadiscountfromparvalue.C)atapremiumaboutparvalue.D)AandCE)noneoftheaboveANSWER:B12.___________isashort-termdebtinstrumentissuedonlybewell-known,creditworthyfirmsandisnormallyissuedtoprovideliquidityorfinanceafirm’sinvestmentininventoryandaccountsreceivable.A)Abanker’sacceptanceB)ArepurchaseagreementC)CommercialpaperD)ATreasurybillANSWER:C13.Commercialpaperhasamaximummaturityof_______days.A)45B)270C)360D)noneoftheaboveANSWER:B14.Aninvestorbuyscommercialpaperwitha60-daymaturityfor$985,000.Parvalueis$1,000,000,andtheinvestorholdsittomaturity.Whatistheannualizedyield?A)8.62percentB)8.78percentC)8.90percentD)9.14percentE)9.00percentANSWER:D15.Afirmplanstoissue30-daycommercia...
