Multiple choice

1. The money market security with the lowest yield to the investor is likely to be:

a. a Treasury bill.

b. commercial paper.

c. agency issues.

d. negotiable CDs.

2. All of the following represents a characteristic of money market instruments except: 

a. low default risk 

b. guaranteed marketability

c. debt obligation 

d. short term

3. The fed funds rate is very important to the economy because

a. it measures the return on the most liquid of all the financial assets traded

b. it is closely related to the conduct of monetary policy

c. it measures directly the availability of excess reserves in the banking system

d. all of the above

4. All of the following money market participants are major investors in money market securities except:

a. Federal Reserve banks. 

b. the U.S. Treasury.

c. commercial banks. 

d. corporate business.