The Difference Between the Interest Rate on Assets That Are

question 179

Multiple Choice

The difference between the interest rate on assets that are not money and the interest rate on assets that are money is:

• A)the opportunity cost of holding money.
• B)the rate of return of holding money.
• C)short-term interest rates.
• D)long-term interest rates.

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Definitions:

Valuation

A systematic process to determine the price at which a security should sell in financial markets.

Designated Market Maker

A designated market maker is a market participant responsible for maintaining liquidity in a financial market by buying and selling securities.

Securities

Assets indicating equity in a publicly-traded company, a bond signifying indebtedness to a company or government, or options granting ownership rights.

Collateralized Debt Obligations

Collateralized debt obligations (CDOs) are complex financial instruments that pool together cash flow-generating assets and repackages this asset pool into discrete tranches that can be sold to investors.