The federal funds, bankers acceptance, commercial paper and repurchase agreements are classified as ____________?
Correct answer: C. money market instruments
- A. counter instruments
- B. long term instruments
- C. money market instruments
- D. capital market instruments
Explanation
Federal funds, bankers’ acceptances, commercial paper and repurchase agreements are short-term instruments used for borrowing and lending liquidity. Therefore, they belong to the money market rather than the long-term capital market.
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Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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