Which of the Following Is NOT a Typical Characteristic of Money-Market

question 60

Multiple Choice

Which of the following is NOT a typical characteristic of money-market securities?

• A)Little or no default risk
• B)Liquid,easily bought and sold
• C)Interest is not taxable at state or federal level
• D)Maturities less than 1 year

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Definitions:

Flotation Costs

Expenses incurred by a company in issuing new securities, including underwriting, legal, and registration fees, reiterating the cost aspect of raising equity or debt.

Retained Earnings

The portion of a company's net earnings not paid out as dividends but retained by the company to be reinvested in its core business or to pay debt.

Constant Growth

A model assuming that a company's dividends will continue to grow at a constant rate indefinitely, used in valuing stocks.

Preferred Stock

A class of stock that has a higher claim on assets and earnings than common stock, often with fixed dividends.