Money Market: Definition And Key Functions - SS2 Accounting Past Questions and Answers - page 1
What is the primary purpose of the money market?
To provide long-term financing to businesses and governments
To facilitate short-term borrowing and lending
To provide a marketplace for stocks and bonds
To regulate interest rates
What financial instruments are commonly traded in the money market?
Stocks and bonds
Mutual funds and ETFs
Treasury bills and commercial paper
Options and futures contracts
How long is the typical borrowing period in the money market?
Up to 3 months
Up to 6 months
Up to 1 year
Up to 5 years
What role do central banks play in the money market?
They provide short-term financing to businesses and governments
They regulate the money supply and interest rates
They facilitate the buying and selling of financial instruments
They provide insurance against financial losses
How does the money market help businesses manage their cash flow?
By providing long-term financing options
By providing insurance against financial losses
By providing short-term borrowing options
By providing investment opportunities
What is the function of the money market?
The money market facilitates short-term borrowing and lending, provides liquidity, helps manage short-term cash flow needs, and helps set interest rates.
What types of financial instruments are commonly traded in the money market?
Treasury bills, commercial paper, certificates of deposit, and repurchase agreements are some of the financial instruments that are commonly traded in the money market.