Investment - Cash & Equivalents - Fixed Income Securities

Question 1

Money Market Deposit Account (MMDA)

Answer 1

A type of bank or thrift institution account that offers unregulated money market rates, requires a minimum deposit, and limits withdrawals

FDIC insured up to $250,000.

Question 2

Brokerage Money Market

Answer 2

The market for high-quality, short-term securities such as negotiable CDs, commercial paper, bankers’ acceptances, and Treasury bills

Question 3

Money Market Mutual Fund

Answer 3

A mutual fund that invests in short-term, highly liquid securities

Question 4

Treasury Bill (T-Bill)

Answer 4

A short-term debt security issued by the U.S. Treasury

Matures in 3,6, & 12 months.
Issued in amounts of $100 to $1,000,000 (discount yield basis).
They are sold at competitive weekly auctions.

Question 5

Commercial Paper

Answer 5

Short term, unsecured promissory notes issued by large, well known, financially strong companies.

Matures in 270 days or less
Denominations start at $100,000
Sold at a discount and is rated.

Question 6

Banker’s Acceptance

Answer 6

A money market instrument used to finance import and exports containing a bank’s guarantee that the foreign exporter will received payment when the goods arrive to the U.S.

Mature in 9 months or less
Trades at a discount to face value
Can be held to maturity or traded.

Question 7

Eurobonds

Answer 7

Bonds that may be denominated in dollars or some other currency and are traded internationally. They are denominated in a currency other than that of the country in which they are issued.

Question 8

Yankee Bonds

Answer 8

Dollar denominated bonds issued in the U.S. by foreign banks and corporations.

The happens with he market conditions in the U.S. are more favorable than the Eurobond market or domestic markets overseas.