In comparing money market instruments to capital market instruments, we can say that
A)money market instruments tend to be less risky and less liquid than capital market instruments.
B)money market instruments tend to be more risky, but less liquid than capital market instruments.
C)money market instruments tend to be more risky and more liquid than capital market instruments.
D)money market instruments tend to be less risky, but more liquid than capital market instruments.

Question

Quizplus · Accepted Answer

Money market instruments, such as treasury bills and commercial paper, tend to be less risky than capital market instruments like stocks and bonds, but more liquid. This is because they have shorter maturities and are issued by highly creditworthy institutions. Capital market instruments have longer maturities and are typically riskier, but may offer higher returns. Therefore, D is the best choice as it accurately describes the relative characteristics of the two types of instruments.

In Comparing Money Market Instruments to Capital Market Instruments, We