Which is a distinguishing feature of the money market? A. Trading of long-term securities B. High liquidity C. Focus on long-term financing D. Involvement of stock exchanges
Question
Which is a distinguishing feature of the money market? A. Trading of long-term securities B. High liquidity C. Focus on long-term financing D. Involvement of stock exchanges
Solution
The distinguishing feature of the money market is B. High liquidity.
Here's why:
A. Trading of long-term securities: This is not a feature of the money market. The money market deals with short-term securities, typically with a maturity of less than one year.
B. High liquidity: This is a key feature of the money market. Securities in the money market are highly liquid, meaning they can be bought or sold with minimal impact on their price.
C. Focus on long-term financing: This is not a feature of the money market. The money market is focused on short-term financing.
D. Involvement of stock exchanges: This is not a feature of the money market. Money market transactions do not typically involve stock exchanges. They are usually conducted over the counter or through other direct means.
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