For the purposes for which they are used,money market securities should have which of the following characteristics?
I. Low trading costs
II. Little price risk
III. High rate of return
IV. Life greater than one year

Question

Quizplus · Accepted Answer

Money market securities are typically short-term, highly liquid, and low-risk investments. Therefore, they should have low trading costs and little price risk. However, as they are short-term investments, they should not have a life greater than one year. A high rate of return is not one of the necessary characteristics of money market securities as they are typically low-yielding but provide steady returns. Therefore, the characteristics that money market securities should have are low trading costs (I) and little price risk (II).

For the Purposes for Which They Are Used,money Market Securities