Unit 2: Session 3: Types & Characteristics of Cash and Cash Equivalents

Which of the following are NOT considered money market instruments? - American depositary receipts. - Commercial paper. - Corporate bonds. - Jumbo (negotiable) certificates of deposit.

1 & 3

Which of the following would you NOT expect to see issued at a discount? A)Commercial paper B)Treasury Bill C)Zero-coupon bond D)Bank jumbo CD

D

Which of the following are characteristics of commercial paper? - Backed by money market deposits. - Negotiated maturities and yields. - Issued by insurance companies. - Not registered with the SEC.

2 & 4

All of the following are true of negotiable, jumbo certificates of deposit EXCEPT: A)they are usually issued in denominations of $100,000 to $1 million. B)they are secured obligations of the issuing bank. C)they usually have maturities of 1 year or less. D)they are readily marketable.

B - Negotiable CDs are general obligations of the issuing bank; they are not secured by any specific asset. They do qualify for FDIC insurance (up to $250,000), but that is not the same as stating that the bank has pledged specific assets as collateral for the loan.