Which of the following is not a money market security

Which of the following is not a money market security
A . Treasury notes
B . Treasury bills
C . Bankers’ acceptances
D . Commercial paper

View Answer

Answer: A

Explanation:

A money market security is one that is initially issued with a maturity of less than one year. Treasury bills are short-term government securities with maturities ranging from a few days to 52 weeks. Bills are sold at a discount from their face value, and do not carry a coupon.

Treasury notes and treasury bonds are not money market instruments as they are issued for a maturity greater than a year. Treasury notes are issued with maturities of 2, 3, 5, 7, and 10 years and pay interest every six months. Treasury bonds pay interest every six months and mature in 30 years.

Commercial paper is issued by corporations to meet their short term funding needs and is a money market instrument. Bankers’ acceptances are short term loans to corporations that are guaranteed by a bank.

Of the given list, since treasury notes are the only instrument that are not money market securities, Choice ‘a’ is the correct answer.