Money Market Yield Quiz

What is the formula to calculate money market yield?

• Money Market Yield = (Annualized Interest / Face Value) x 360 / Days to Maturity

• Money Market Yield = (Annualized Interest / Par Value) x 360 / Days to Maturity

• Money Market Yield = (Annualized Interest / Par Value) x 365 / Days to Maturity

• Money Market Yield = (Annualized Interest / Par Value) x 360 / Days to Issue

Answer explanation

The correct formula to calculate money market yield is Money Market Yield = (Annualized Interest / Par Value) x 360 / Days to Maturity

If a money market security is purchased for $9,800 and sold for $10,000 after 60 days, what is the money market yield?

• 3%

• 2.5%

• 0.5%

• 1.22%

Answer explanation

The money market yield is calculated using the formula: (Face Value - Purchase Price) / Purchase Price * (360 / Days Held). In this case, the yield is (10,000 - 9,800) / 9,800 * (360 / 60) = 0.122, which is 1.22%.

What is the annualized money market yield if the security in the previous question was held for 120 days?

• The annualized money market yield if the security was held for 120 days can be calculated using the given formula.

• The annualized money market yield is not affected by the number of days the security is held

• The annualized money market yield decreases as the number of days the security is held increases

• The annualized money market yield increases as the number of days the security is held increases

Answer explanation

The annualized money market yield if the security was held for 120 days can be calculated using the given formula.

When calculating money market yield, what is the significance of the face value of the security?

• The face value is used to calculate the coupon rate of the security

• The face value is irrelevant in the calculation of money market yield

• The face value is used to determine the maturity date of the security

• The face value of the security is used in the calculation of money market yield.

Answer explanation

The face value of the security is used in the calculation of money market yield.

If the discount on a money market security is $200 and the face value is $10,000, what is the money market yield?

• 2%

• 5%

• 10%

• 15%

Answer explanation

The money market yield is calculated as (Discount/Face Value) * (360/Days to Maturity). In this case, (200/10000) * (360/365) = 0.02 or 2%.

What is the relationship between the money market yield and the purchase price of the security?

• Inverse

• Constant

• Direct

• Unrelated

Answer explanation

The relationship between the money market yield and the purchase price of the security is inverse, meaning as the yield increases, the purchase price decreases, and vice versa.

If the holding period of a money market security is 90 days and the discount is $150, what is the money market yield?

• 0.025

• 0.0025

• 0.1

• 0.0556

Answer explanation

The money market yield is calculated using the formula: (Discount / Face Value) * (360 / Holding Period). In this case, (150 / 10000) * (360 / 90) = 0.0556, so the correct answer is 0.0556.

How is the money market yield different from the current yield?

• The money market yield is calculated annually, while the current yield is calculated monthly.

• The money market yield is based on long-term debt securities, while the current yield is based on short-term debt securities.

• The money market yield includes the impact of inflation, while the current yield does not consider inflation.

• The money market yield reflects the yield on short-term debt securities, while the current yield is based on the annual income divided by the current price of the security.

Answer explanation

The money market yield reflects the yield on short-term debt securities, while the current yield is based on the annual income divided by the current price of the security.

If the purchase price of a money market security is $9,500 and the face value is $10,000, what is the money market yield?

• 10.5%

• 5.26%

• 7.2%

• 3.75%

Answer explanation

The money market yield is calculated as (Face Value - Purchase Price) / Purchase Price * 100, which gives (10000 - 9500) / 9500 * 100 = 5.26%

What factors can affect the money market yield of a security?

• Social media trends, consumer spending, and technological advancements

• Geographical location, time of day, and personal preferences

• Interest rates, inflation, credit risk, and market demand

• Weather conditions, political stability, and exchange rates

Answer explanation

The factors that can affect the money market yield of a security are interest rates, inflation, credit risk, and market demand.