Question

What kind of instruments does the money market use to deal in short-term monetary assets?

Options

• Bank loans and capital market borrowings

• Long-term borrowings with flotation cost

• Credit sales that have not become tradable

• Unsecured but lower-risk, highly liquid short-term instruments

Answer 1

The money market uses unsecured but lower-risk, highly liquid short-term instruments. These characteristics support transactions in monetary assets that mature in one year or less.