Money market instruments have original maturities of what?

Money market instruments have original maturities of what?

• A. One year or less
• B. More than five years
• C. Ten to twenty years
• D. Indefinite

Answer: (A)

Money market instruments are defined by their short time horizon. They have original maturities of one year or less, which makes them highly liquid and low in credit and interest-rate risk. This short maturities focus supports cash management and the need to quickly access or roll over funds. Examples include Treasury bills, commercial paper, certificates of deposit, and repurchase agreements. Longer-term securities—maturities beyond one year, such as five-, ten-, or twenty-year instruments—fall into the realm of capital markets, where risks and returns reflect longer horizons. Indefinite or perpetual maturities aren’t typical money market instruments either.

Money market instruments are defined by their short time horizon. They have original maturities of one year or less, which makes them highly liquid and low in credit and interest-rate risk. This short maturities focus supports cash management and the need to quickly access or roll over funds. Examples include Treasury bills, commercial paper, certificates of deposit, and repurchase agreements. Longer-term securities—maturities beyond one year, such as five-, ten-, or twenty-year instruments—fall into the realm of capital markets, where risks and returns reflect longer horizons. Indefinite or perpetual maturities aren’t typical money market instruments either.