CMA Intermediate · Financial Management and Business Data Analytics · Money Market
Which feature distinguishes money market instruments from capital market instruments?
Money market instruments are characterised by high liquidity and low default risk because they mature in the short term. They are mostly wholesale, large-value instruments, unlike capital market securities that offer long-term funds or ownership rights.
- AHigh liquidity and low default risk because of short maturityCorrect
- BLong gestation and ownership rights in the issuer
- CDominance of retail investors buying small lots
- DIssue only through public offers with a prospectus
Explanation
Money market instruments are short-term, highly liquid, and generally low in risk, with large-denomination wholesale dealing. Ownership rights and long gestation describe capital market securities. Retail dominance and prospectus-based public offers are not typical of the money market.
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