Question : Which of the following is a feature of a money market instrument?
Option 1: High credit risk
Option 2: long maturity period
Option 3: Low liquidity
Option 4: Low interest rate
Correct Answer: Low interest rate
Solution : The correct answer is (d). Low interest rate
Money market instruments are short-term debt securities that are typically characterized by low interest rates. They are considered to be relatively low-risk investments due to their short maturity periods and high liquidity. Money market instruments include Treasury bills, commercial paper, certificates of deposit, and short-term government and corporate bonds. They are commonly used by investors as a means to preserve capital and provide a safe haven for funds in the short term.
