Final answer:
The instruments traded in a money market are B) U.S. Treasury bills and D) U.S. government agency securities, as they are short-term securities suitable for money markets.
Step-by-step explanation:
The student has asked which instruments are traded in a money market. The options are A) State and local government bonds, B) U.S. Treasury bills, C) Corporate bonds, and D) U.S. government agency securities. Money markets specialize in very short-term debt securities, and the correct instruments that are traded in this market are U.S. Treasury bills (B) and U.S. government agency securities (D).
U.S. Treasury bills, or T-bills, are short-term securities with maturities of 13, 26, or 52 weeks and are considered some of the safest financial assets, backed by the full faith and credit of the U.S. government. Meanwhile, U.S. government agency securities are instruments issued by various entities of the U.S. government and also are part of the money market for the short-term funding needs.
While state and local government bonds and corporate bonds are indeed bonds, they are typically not traded in the money markets due to their longer maturities. Money markets specifically deal with short-term debt that can mature in less than one year.