_____________ is a short-term debt instrument issued by commercial banks in denominations of $100,000 or more with typical maturities ranging from one month to one year that have an active secondary market that allows short-term investors to easily match their cash or liquidity needs when they arise.
A) A negotiable certificate of deposit (NCD)
B) A repurchase agreement
C) Commercial paper
D) Government bond

Question

Quizplus · Accepted Answer

The description matches that of a negotiable certificate of deposit (NCD), which is a short-term debt instrument issued by commercial banks in denominations of $100,000 or more with typical maturities ranging from one month to one year that have an active secondary market that allows short-term investors to easily match their cash or liquidity needs when they arise. Repurchase agreements (B) involve the sale of securities with an agreement to repurchase them at a later date, while commercial paper (C) is typically issued by corporations to finance short-term obligations and is sold in denominations of $100,000 or more. Government bonds (D) are debt securities issued by government entities to finance public expenditures and typically have longer maturities than one year.

_____________ Is a Short-Term Debt Instrument Issued by Commercial Banks