Exam 10: Factors Affecting the Volume of CDs

There is no difference in risk between federal funds and clearinghouse funds.

The American money market is considered to be one of the most efficient markets in the world, according to your text.

The interest rate on money market loans defines the cost of borrowing in the money market, but there is no cost faced by a potential lender of funds in the money market.

What dangers do bank-dominated money markets face that may be less of a problem in security-dominated money markets?

The risk that a borrower will fail to meet some or all of his or her promised principal and/or interest payments on a loan is called:

Money market securities generally protect investors against inflation risk adequately.

How are the yields on Treasury bills calculated?

The widely quoted money market interest rate that is not determined by demand and supply forces in the marketplace is the:

The risk that increases in the average price level for all goods and services will reduce the purchasing power of the investor's return on an investment is known as:

Arbitrage of funds is a common phenomenon in the capital market, but is not frequently observed in the money market.

The return on bankers acceptances is generally lower than the return on commercial paper.

Money market loans all share the same purpose for borrowing money.

Increasingly domestic money markets are being integrated into the international money market.

An advantage of using Treasury Direct is that the US treasury:

How are yield spreads figured in the money market? Why is this important to know?

List and define the various types of Treasury bills. Why are there so many different types?

Securities issued and guaranteed as to principal and interest payments by the U.S. Government are assumed by investors in the money markets to carry zero ____ risk. Choose the correct term to fill in the blank above from the choices listed below.

The money market provides all of the following except:

Lack of perfect harmony between inflows and outflows of cash gives rise to the need for a capital market.

The risk that an investor will be forced to place earnings from a loan or security into a lower yielding investment because interest rates have subsequently fallen is known as market risk, according to your text.