Question

Indicate whether the following instruments are examples of money market or capital market securities.

a. U.S. Treasury bills
b. Long-term corporate bonds
c. Common stocks
d. Preferred stocks
e. Dealer commercial paper

Answer 1

Answer and Explanation:

In the Money Market Securities, it is treated as the short-term securities that means they are traded for short-term period i.e. less than one year. It has the less risk also the return is also very less but the liquidity is very rich. Examples - treasury bills, commercial papers etc

While on the other hand, the capital market securties are traded for the long term i.e. more than one year. It contains the high risk also the return is very high. Examples - stocks, bonds, debentures

So based on the above explanation, the classification is as follows

a. Money market securities

b. capital market securities

c. capital market securities

d. capital market securities

e. money market securities