Determine whether each security listed below would be sold i

Determine whether each security listed below would be sold in an equity market or a debt market. (1=Equity Market, 2=Debt Market)

________ Shares of Ford stock

________ Corporate bond with 30 years to maturity

________ Commercial paper issued by Ford with 90 days to maturity

________ U.S. Treasury bond with 30 days to maturity

Solution

SOLUTION:

1) Shares of Ford stock...Equity market

2) Corporate bond with 30 years to maturity....Debt market

3) Commercial paper issued by Ford with 90 days to maturity....Debt market

4) U.S. Treasury bond with 30 days to maturity....Debt market

Explanation:

Unlike bonds, stocks don’t have a date of maturity, which means they often don’t have to be repaid at a certain time, thus Shares of Ford stock is included in the equity market. The remaining have the maturity date thus included in debt market