Chapter 5

Question 1

Markets that trade debt securities with maturities of less than one year

Answer 1

money markets

Question 2

primary source of funding for private firms to buy inventories for resale or production

Answer 2

money markets

Question 3

can be purchased to manage the excess cash in the firm

Answer 3

money market

Question 4

highly-liquid investments that can be converted to cash easily

Answer 4

money market

Question 5

short-term obligations issued by the government to cover government deficits and refinance maturing government debt

Answer 5

treasury bills

Question 6

agreement involving the sale of securities by one party to another with a promise to repurchase the securities at a specified price and date

Answer 6

repurchase agreements

Question 7

unsecured short-term promissory note issued by a company to raise short-term cash, often to finance working capital requirements

Answer 7

commercial paper

Question 8

bank-issued, fixed maturity, interest-bearing time deposit that specifies an interest rate and maturity date and is negotiable

Answer 8

negotiable certificate of deposit

Question 9

time draft payable to a seller of goods with payment guaranteed by a bank

Answer 9

banker’s acceptance