Which of the following is incorrect? a. Negotiable certificates of deposit are m

Question

Which of the following is incorrect?
a. Negotiable certificates of deposit are marketable receiptsfor funds that have been deposited in a bank for a fixedperiod. b. Repurchase agreements are legal contracts that involve theactual sale of securities by a borrower to the lender, with acommitment on the part of the lender to pay for the securities atthe contract price plus a stated interest charge. c. Commercial paper refers to short-term, unsecured promissorynotes sold by large businesses to raise cash. d. Federal agency securities are debt obligations ofcorporations and agencies that have been created to effect thevarious lending programs of the U.S. government. Which of the following is incorrect?
a. Negotiable certificates of deposit are marketable receiptsfor funds that have been deposited in a bank for a fixedperiod. b. Repurchase agreements are legal contracts that involve theactual sale of securities by a borrower to the lender, with acommitment on the part of the lender to pay for the securities atthe contract price plus a stated interest charge. c. Commercial paper refers to short-term, unsecured promissorynotes sold by large businesses to raise cash. d. Federal agency securities are debt obligations ofcorporations and agencies that have been created to effect thevarious lending programs of the U.S. government.

Explanation / Answer

   Repurchase agreements involve the actualsale of securities by a borrower to the lender, with a commitmenton the part of the borrower to repurchase thesecurities at the contract price plus a stated interestcharge. Thus, Answer is Option (b)

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