Question

Consider the following assets:
(i) A work of art;
(ii) A United States Treasury bill;
(iii) A share in Microsoft;
(iv) A loan to a close relative;
(v) A loan to General Motors. For each asset, answer the following questions:
(a) Does the asset have a high rate of return or a low rate of return (on average)?
(b) Is the asset high risk or low risk?
(c) Is the asset a long-maturity asset or a short maturity asset?
(d) Is the asset highly liquid, less liquid, somewhat illiquid, or highly illiquid?
(e) Explain why the asset has the above four properties.
(f) Which of the properties of money (medium of exchange, store of value, unit of account) does the asset have? Would we consider it money and why or why not?



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  • CreatedDecember 05, 2014
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