DeVry University The Characteristics of Money Market Instruments Discussion

Question Description

Question 1

You are the CEO of a Fortune 500 company. You have two objectives.

1. Invest $5 million cash on hand short term (overnight to one month).
2. Borrow $100 million for your firms working capital needs.

How would you achieve both objectives using the money markets? Describe your alternatives in terms of the characteristics of money market instruments. Which of the money market instruments would you choose in each case? Why?

Question 2

What are repos? How popular are they as a money market instrument compared to other money market options? Under what circumstances does engaging in a repo transaction makes sense? How important are expectations to the repo transaction?

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