Question 1 a.

Explain the THREE (3) major economic functions below as it relates to financial markets.

i. Price discovery

ii. Liquidity

iii. Reduction of transaction costs

b. Outline FIVE (5) characteristics of the money market (5 marks) c. Briefly describe the money market securities listed below:

i. Treasury bills

ii. Repurchase agreement (REPO)

iii. Commercial papers (CP)

iv. Certificate of Deposits (CD)

v. Interbank loans