TM - Chapter 5 Quiz

Which of the following is NOT true for both bankers acceptances and trade acceptances? A. They are both used to finance the shipment of goods B. They both may be sold to an investor at a discount prior to maturity C. They are both less expensive forms of financing than loans D. They both transfer the buyer s credit risk to a third party

D. They both transfer the buyer s credit risk to a third party

"Company XYZ is conservative when investing in their short-term portfolio. XYZ is looking to add the following money market instruments in their own country: a reverse re-purchase agreement, a floating-rate note, and a negotiable certificate of deposit. What types of investment risks are associated with these instruments? "

credit and liquidity risk

Loss exposures related to treasury management may include which of the following?

deterioration of investment principal

Money market funds are able to obtain very competitive trading terms because:

of the economies of scale

"Senior management at ABC Company plans to make a large capital expenditure to bolster its infrastructure exactly one year from now. Their primary concern is to preserve the current capital position until the expected cash outlay. The majority of the cash at ABC Company is held in treasury notes, but management would like to also invest some of the money into corporate bonds and money market funds. Which investment objective BEST suits the needs of ABC Company? "

safety