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[Money Markets] What are the characteristics of money market instruments? Why must a financial claim...

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Finance

  1. [Money Markets] What are the characteristics of money market instruments? Why must a financial claim possess these characteristics to function as a money market instrument?

  1. [Bond Markets] If a corporate bond paid 9% interest, and you are in the 28% income tax bracket, what rate would you have to earn on a general obligation municipal bond of equivalent risk and maturity in order to be equally well off? Given that municipal bonds are often not easily marketable, would you want to earn a higher or lower rate than the rate you just calculated?

  1. [Mortgage Markets] Suppose you are interested in buying a home valued at $500,000, and 30-year fixed-rate mortgages have an interest rate of 6%. What is your minimum down payment, assuming you will borrow with a conventional mortgage? If property taxes and homeowners insurance total $500 per month, and you have other loan payments totaling $300 per month, how much do you need to earn on a monthly basis to qualify for a mortgage?

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