If a firm needs to adjust its liquidity position, then it would participate in:
A) the money market.
B) the bond market.
C) the stock market.
D) the auction market.

Question

Quizplus · Accepted Answer

The money market is a market for short-term debt securities with maturities of less than one year. It is primarily used by firms, governments, and financial institutions to raise funds for temporary or immediate needs, such as adjusting liquidity positions. The money market provides access to short-term funds through instruments such as commercial paper, treasury bills, and certificates of deposit. Therefore, participating in the money market is the best choice for a firm that needs to adjust its liquidity position.

If a Firm Needs to Adjust Its Liquidity Position, Then