An example of money market instruments would be which of the following?

• A. Treasury bills
• B. Corporate bonds
• C. Common stock
• D. Mortgage-backed securities

Answer: (A)

Money market instruments are short-term, highly liquid debt used for cash management. Treasury bills fit this category because they have maturities of one year or less (commonly a few weeks to a year) and are issued at a discount to par, redeeming at par at maturity. This structure provides near-cash liquidity with very low credit risk since they’re issued by the government.

The other instruments sit in different corners of the market: corporate bonds typically mature longer than a year, common stock is equity, and mortgage-backed securities are longer-term, more complex asset-backed claims. These characteristics place them outside the money market.