SIE Exam Question 460: Answer and Explanation

Question: 460

Which of the following is NOT true of money market instruments?

• A. They are issued by corporations with high credit ratings, and are thus considered safe.
• B. They are highly liquid fixed-income securities.
• C. They are a method used to obtain short-term financing.
• D. They are considered risky because of short-term maturities.

Correct Answer: D

Explanation:

D: The short-term maturity and the fact that the issuers have solid credit ratings make money market instruments very safe.