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- essment i Since idle cash does not make money, a manager may choose to invest this extra cash in temporary investments called Multiple Choice transaction balances. junk bonds. secured bonds. marketable securities. Saved long-term assets. HelpWhich of the following is not true with Money Market? Select one: O a. Deals in short term funds O b. Provides funds for fixed capital c. None of the options O d. Provides link between depositors and borrowersWhich of the following is not true with Money Market? Select one: a. Deals in short term funds b. None of the options c. Provides funds for fixed capital d. Provides link between depositors and borrowers
- The risk of not having sufficient cash and borrowing capacity to meet deposit withdrawals, loan demand and other cash needs is called: a. Interest rate risk. b. Price risk. O c. Liquidity risk. O d. Country risk.Keeping your funds in liquid assets is riskier than keeping them in liquid assets and therefore investors require a higher expected rate of return on liquid assets.What is not an advantage of a Treasury (T) Note? Select one: a. Extremely liquid security. b. Loss of potential purchasing power (inflation > yield). c. An investor’s capital is secure. d. Better returns than a bank savings account.
- Hedging is a risk management strategy that is used in limiting or offsetting probability of loss from fluctuations in the prices of commodities, currencies, or securities. In effect, hedging is a transfer of risk without buying insurance policies. REQUIRED: Discuss the importance of hedging to the financial risk manager Are there any downside to hedging?Why is it a bad idea in investing in just one investment? Discuss the concept of risk return. Explain why a non-interest bearing note is effectively an interest-bearing note?Liquidity means having access to ready cash, including savings and credit, to cover unexpected expenses. In managing your liquidity, you must consider the following: management deals with the decisions about how much credit you need to support your spending and which sources of credit to use. management deals with deciding how much money to retain in liquid form and how to allocate the funds among short-term investment instruments. A Credit; Money B Cash; Debit C Money; Credit D Credit; Debit Debit; Credit
- The purpose of the inflation premium is to maintain the purchasing power of money while it is loaned to someone else. TTrueFFalse What kind of problem bad credit risks people pose to financial intermediaries ? AMoral hazard BNone of the above CAdverse Selection DFree-ridingFor Discounted Cash Flows to be useful, individual investors and companies must estimate a discount rate and cash flows correctly. Select one: a. True a. FalseExchange-traded funds are popular investments that are easy to sell and have the potential to earn significant income for investors. However, they fluctuate wildly in price, increasing the likelihood that an investment fails. This investment features? low risk, low return, and poor liquidity. low risk, high return, and good liquidity. high risk, high return, and poor liquidity. high risk, high return, and good liquidity.