Which of the Following Is True of Money Market Instruments

question 57

Multiple Choice

Which of the following is true of money market instruments?

• A) Their yields are highly correlated over time.
• B) They typically sell for par value when they are initially issued (especially T-bills and commercial paper).
• C) Treasury bills have the highest yield.
• D) They all make periodic coupon (interest) payments.
• E) A and B

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Definitions:

Purchase Accounting Method

A set of accounting techniques used to assess the acquisitions of assets, liabilities, and non-controlling interests of a company.

Goodwill

An intangible asset that arises when a business is acquired for more than the sum of the fair value of its identifiable net assets.

Annual Impairment Test

A review conducted yearly to determine if an asset's carrying value exceeds its recoverable amount, leading to an adjustment if necessary.

Tax-loss Carryforwards

A provision in the tax code that allows an individual or company to use losses from one year to offset future profits for tax purposes.