A bond issued by the U.S. Treasury with a maturity of 90 days is sold on the
a. primary market
b. capital market
c. secondary market
d. money market
d. money market
d. money market
The correct answer is d. money market.
To arrive at this conclusion, let me explain the options provided:
a. The primary market refers to the market where newly issued securities are sold for the first time. This includes initial public offerings (IPOs) and the issuance of new bonds. However, in this case, the bond mentioned already has a maturity of 90 days, so it is not being sold for the first time.
b. The capital market is a broader term that encompasses various financial institutions and facilities through which long-term debt and equity securities are traded. It includes stock exchanges and bond markets. However, the bond in question has a short-term maturity of only 90 days, which makes it more relevant to the money market.
c. The secondary market is where already issued securities are bought and sold by investors. This includes stock exchanges and bond markets, where investors can trade previously issued bonds. However, the bond in question is still within the initial 90-day period of its issuance, so it has not yet entered the secondary market.
d. The money market refers to a segment of the financial market where short-term borrowing and lending occurs. It deals with instruments that have a maturity of one year or less. Treasury bills, such as the 90-day bond mentioned, are commonly traded in the money market due to their short-term nature and low risk.
Therefore, based on the information provided, the correct answer is d. money market.