Which of the following statements is most correct?
A) Eurodollars are deposits placed in U.S. banks that remain denominated in foreign currencies.
B) Treasury bills are rarely traded in secondary money markets.
C) The most common trading unit for federal funds is $1 million.
D) Federal funds are used most often by firms to finance inventories.

Question

Quizplus · Accepted Answer

The most common trading unit for federal funds is indeed $1 million. A is incorrect because Eurodollars are denominated in U.S. dollars but held in foreign banks. B is incorrect because Treasury bills are actively traded in secondary money markets. D is incorrect because federal funds are primarily used by banks to lend and borrow overnight funds from each other, not by firms to finance inventories.

Which of the Following Statements Is Most Correct