Which of the following statements about the money markets are true? A. Unlike mo

Question

Which of the following statements about the money markets are true? A. Unlike most participants in the money market, the U.S. Treasury Department is always a demander of money market funds and never a supplier. B. Most money market securities do not pay interest. Instead, the investor pays less for the security than it will be worth when it matures. C. Pension funds invest a portion of their assets in the money market to have sufficient liquidity to meet their obligations. D. The most influential participant(s) in the U.S. money market is the Federal Reserve. E. All of the above are true.

Explanation / Answer

Option E is correct

It is true that Fed is the most active participant in the US money market as it has to timely conduct open market operations. There are no interest paid in the money market. The objective of all pension plans is virtually same: providing another kind of financial security, especially at times when there are no source of earning.

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