ICMA Exam FMFQ Topic 2 Question 73 Discussion

Actual exam question for ICMA's FMFQ exam

Question #: 73
Topic #: 2

[All FMFQ Questions]

You purchase a USD Treasury Bill. Which of the following sentences best describes the trade you have done?

AYou have purchased a credit risk free security for which you have paid face value and will receive at maturity face value plus accrued interest

BYou have purchased a credit risk free security for which you have paid less than face value and will receive at maturity face value

CYou have purchased an interest rate risk free security for which you have paid face value and will receive at maturity face value plus accrued interest

DYou have purchased an interest rate risk free security for which you have paid less than face value and will receive at maturity face value

Show Suggested Answer

Suggested Answer: C

by Carmelina at Dec 08, 2024, 07:01 PM

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Narcisa

3 days ago

This question seems straightforward. I think the key is to focus on the characteristics of a Treasury Bill - it's a credit risk-free security, and you typically pay less than face value and receive face value at maturity.

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Ernie

5 months ago

Wait, so I can't buy a Treasury Bill and get a free trip to the Bahamas? Darn, there goes my retirement plan.

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Isidra

5 months ago

C) You have purchased an interest rate risk free security for which you have paid face value and will receive at maturity face value plus accrued interest

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Gilma

5 months ago

B) No, you can't get a free trip to the Bahamas with a Treasury Bill.

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Quiana

5 months ago

A) You have purchased a credit risk free security for which you have paid face value and will receive at maturity face value plus accrued interest

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Holley

6 months ago

Hmm, I'm not sure about this one. Let me think... Ah, got it! The answer must be C. Accrued interest, that's the key. I should have paid more attention in my finance class.

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Jerlene

4 months ago

Actually, I think it's D. You pay less than face value and receive face value at maturity.

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Jutta

4 months ago

I'm pretty sure it's C. You pay face value and get face value plus accrued interest at maturity.

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Lezlie

5 months ago

No, I believe it's B. You pay less than face value and receive face value at maturity.

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Charlette

5 months ago

I think the answer is actually A. You pay face value and get face value plus accrued interest at maturity.

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Felicidad

6 months ago

This question is a piece of cake! Of course, the answer is D. Who doesn't know that Treasury Bills are interest rate risk-free securities? I could ace this exam with my eyes closed.

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Devon

6 months ago

I agree with Eric. Treasury Bills are a great investment option for those looking for a low-risk, short-term investment.

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Ashanti

5 months ago

C) You have purchased an interest rate risk free security for which you have paid face value and will receive at maturity face value plus accrued interest

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Howard

5 months ago

A) You have purchased a credit risk free security for which you have paid face value and will receive at maturity face value plus accrued interest

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Eric

6 months ago

Option B is the correct answer. Treasury Bills are a type of short-term government debt securities that are sold at a discount to their face value and redeemed at maturity for the full face value.

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