1. Considering how they are going to be used, which of the following characteristics should money market securities have?

I. Low trading costs II. Little price risk III. High rate of return IV. Life greater than one year

A. I and III B. II and IV C. III and IV D. I and II E. I, II, and III

2. Concerning commercial paper issued within the United States, which one of the following statements is NOT true?

A. is an unsecured short-term promissory note. B. has a maximum maturity of 270 days. C. is virtually always rated by at least one ratings agency. D. has no secondary market. E. carries an interest rate above the prime rate.

3. A negotiable CD

A. is a bank issued transactions deposit. B. is a registered instrument. C. is a bank issued time deposit. D. has denominations ranging from $50,000 to $10 million. E. pays discount interest.

4. Comparing LIBOR to SOFR, which of the following is correct?

A. LIBOR is based on rates from actual loans between banks. B. LIBOR is not widely used in either the U.S. or in foreign markets. C. SOFR is not being used yet, but will be used in the near future. D. U.S. Regulators are pushing for SOFR to replace LIBOR. E. LIBOR, unlike SOFR, has never been manipulated by bankers.

5. While money market securities are all liquid, the most liquid are

A. commercial paper. B. banker's acceptances. C. T-Bills. D. Fed funds. E. repurchase agreements.