129k views
1 vote
Certificate of Deposit, Commercial Paper, Banker's Acceptance and Repurchase Agreements are traded in the Money Market. Assuming an amount of $200,000 the riskiest transaction is

1 Answer

4 votes

Answer:

Assuming an amount of $200,000 the riskiest transaction is:

Commercial Paper

Step-by-step explanation:

A certificate of deposit is a fixed savings account in which the account holder deposits some amount for a fixed period in return for the interest payable by the bank, including the initial deposit.

A commercial paper is a short-term corporation debt issued to finance the purchase of inventories and payment of accounts payable, payroll, and other short-term corporate debts.

A Banker's Acceptance is a short-term guarantee issued by a bank to make it legally binding on the bank to pay an amount arising from a business relationship between a customer and a seller. It is usually used when the seller and the customer have not established a strong credit relationship.

Repurchase Agreements are short-term debts established by dealers in government securities. The dealer sells government securities to investors, usually on an overnight basis, so that they can buy them back the following day at slightly higher prices.

User Zeldi
by
5.6k points