Which of the Following Statements Is Most Correct

question 52

Multiple Choice

Which of the following statements is most correct?

• A) Marketable government securities are those securities that cannot be transferred to other persons or institutions and can be redeemed only by being turned in to the U.S. government
• B) Nonmarketable government securities are those securities that can be transferred to other persons or institutions and can be redeemed only by being turned in to the U.S. government
• C) Nonmarketable government securities are those securities that cannot be transferred to other persons or institutions and can be redeemed only by being turned in to the U.S. government
• D) Marketable government securities must only be sold or transferred through commercial banks

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Definitions:

Flotation Costs

Expenses incurred by a company in issuing new securities, including underwriting, legal, and registration fees.

Capital Gains

The profit earned from the sale of assets or investments when the selling price exceeds the purchase price.

CAPM

Capital asset pricing model. A statistical model of the investment world aimed at explaining how required returns are determined in financial markets and thereby how stock prices are set. Also see SML.

Risk-Free Interest

The return on investment with no risk of financial loss, typically associated with government bonds.