Question

Rank the following by investment timing shortest to longest: CDs T notes T bonds Commercial paper

Rank the following by investment timing shortest to longest:

CDs

T notes

T bonds

Commercial paper

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Answer #1
  • CDs have a minimum maturity of 7 days to 1 year for commercial banks and 1 year to 3 year for other financial institutions
  • T notes have a maturity of 1 - 10 years
  • T bonds have a maturity of 10 - 30 years
  • Commercial paper has a maturity of 270 days in the global financial market

Now ranking them would be CD, Commercial paper, T notes and T bonds from shortest to longest in that order because the CDs can be for a period as short as 7 days

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