The money market is a financial market in which: only long-term debt instruments are traded only short-term debt instruments are traded only medium-term debt instruments are traded none of the other alternatives is correct Question 8Tips1 / 1 ptsCurrency includes: paper money, coins and deposits paper money and coins paper money, coins and checks paper money and savings accounts Question 9Tips1 / 1 ptsThe three functions of money are: medium of exchange, unit of account and specialization medium of exchange, indirect exchange and store of value medium of exchange, unit of account and store of value unit of account, specialization, and store of value Question 10Tips1 / 1 ptsAssume you win $1.000.000 in the lottery. 40% of the prize is paid to you today and the remainder will be paid in a year’s time. If the interest rate is 7%, what is the present value of the lottery prize? Provide your answer up to two decimal places.Quiz Score: 10 out of 10Submission Details:
Question
The money market is a financial market in which: only long-term debt instruments are traded only short-term debt instruments are traded only medium-term debt instruments are traded none of the other alternatives is correct Question 8Tips1 / 1 ptsCurrency includes: paper money, coins and deposits paper money and coins paper money, coins and checks paper money and savings accounts Question 9Tips1 / 1 ptsThe three functions of money are: medium of exchange, unit of account and specialization medium of exchange, indirect exchange and store of value medium of exchange, unit of account and store of value unit of account, specialization, and store of value Question 10Tips1 / 1 ptsAssume you win $1.000.000 in the lottery. 40% of the prize is paid to you today and the remainder will be paid in a year’s time. If the interest rate is 7%, what is the present value of the lottery prize? Provide your answer up to two decimal places.Quiz Score: 10 out of 10Submission Details:
Solution
Question 7: The money market is a financial market in which only short-term debt instruments are traded.
Question 8: Currency includes paper money and coins.
Question 9: The three functions of money are medium of exchange, unit of account, and store of value.
Question 10: To calculate the present value of the lottery prize, you need to discount the future payment back to today's terms using the interest rate. The calculation is as follows:
- 40% of the prize is paid today, which is $400,000.
- The remaining 60% (or $600,000) will be paid in a year's time. To find the present value of this amount, you use the formula for present value which is PV = FV / (1 + r)^n, where FV is the future value, r is the interest rate, and n is the number of periods.
So, PV = 560,747.66
Therefore, the present value of the lottery prize is 560,747.66 (the discounted value of the future payment) = $960,747.66.
Similar Questions
Which among the following is not correct regarding the Money Market?Question 7Answera.Money market instruments are not very highly liquidb.Function of money market is to provide inefficient liquidity position for commercial banks, financial institution, Mutual funds, insurance companies, corporate etc.c.Maturity in this market ranging from overnight to over one yeard.All above
Which segment of the Money Market involves short-term borrowing and lending between banks and primary dealers? A. Treasury bills (T-bills) B. Commercial paper (CP) C. Certificates of deposit (CD) D. Call money market
Which is a distinguishing feature of the money market? A. Trading of long-term securities B. High liquidity C. Focus on long-term financing D. Involvement of stock exchanges
What is the meaning of Money Market?
One key difference between the capital market and the money market is the: A. Investment horizon B. Level of liquidity C. Regulatory oversight D. Type of financial instruments traded
Upgrade your grade with Knowee
Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.