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Consider a money market instrument with 50 days to maturity and a quoted ask price of 98. Which two of the following statements are correct as they relate to this instrument? The bond equivalent yield is an effective annual rate. The bank discount rate is lower than the bond equivalent yield. The bank discount rate is an effective annual rate. The bond equivalent yield is lower than the effective annual rate.

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Answer:

The bank discount rate is lower than the bond equivalent yield.

The bank discount rate is an effective annual rate.

Step-by-step explanation:

In simple words, Money market securities refers to the short-term funding vehicles that help to improve corporate financial flexibility. The key feature of these types of investments is how they could quickly be transformed into cash, thereby maintaining an individual's cash needs.

The financial sector and its devices are typically sold over the board, but regular investors simply could not do so. It would have to be completed via certificated brokers, or perhaps a fund manager on the financial markets.

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