Question Tag: Short-term securities

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FM – MAY 2019 – L2 – Q1b – Financial markets

Explain the different short-term money market instruments such as Bankers’ acceptance, Commercial Paper, Repurchase Agreement, and Term deposit.

Question:
The money market is the arena in which financial institutions make available to a broad range of borrowers and investors the opportunity to buy and sell various forms of short-term securities. The short-term debts and securities sold on the money markets, known as money market instruments, have maturities ranging from one day to one year and are extremely liquid.

Required: Explain the following short-term market instruments:

  1. Bankers’ acceptance (2 marks)
  2. Commercial Paper (2 marks)
  3. Repurchase Agreement (Repo) (2 marks)
  4. Term deposit (2 marks)

(Total: 8 marks)

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FM – MAY 2019 – L2 – Q1b – Financial markets

Explain the different short-term money market instruments such as Bankers’ acceptance, Commercial Paper, Repurchase Agreement, and Term deposit.

Question:
The money market is the arena in which financial institutions make available to a broad range of borrowers and investors the opportunity to buy and sell various forms of short-term securities. The short-term debts and securities sold on the money markets, known as money market instruments, have maturities ranging from one day to one year and are extremely liquid.

Required: Explain the following short-term market instruments:

  1. Bankers’ acceptance (2 marks)
  2. Commercial Paper (2 marks)
  3. Repurchase Agreement (Repo) (2 marks)
  4. Term deposit (2 marks)

(Total: 8 marks)

Login or create a free account to see answers

Find Related Questions by Tags, levels, etc.