What is 'Money Market' ? List and describe the various money market instruments used by the banks.
The money market is a crucial component of the financial system where short-term borrowing and lending of funds occur among financial institutions and corporations. It's where highly liquid, low-risk, short-term debt securities are traded. Banks play a pivotal role in the money market, utilizing various instruments to manage their liquidity and meet short-term funding needs.
Here's a rundown of key money market instruments used by banks:
1. Treasury Bills (T-Bills): These are short-term government securities with maturities ranging from a few days to a year. T-Bills are issued at a discount to their face value and redeemed at par. Banks frequently invest in T-Bills due to their low risk and high liquidity.
2. Certificates of Deposit (CDs): CDs are time deposits offered by banks for specific periods at fixed interest rates. They provide higher returns compared to regular savings accounts. Banks issue CDs to raise funds and manage liquidity. They are negotiable and can be traded in the secondary market.
3. Commercial Paper (CP): CP is an unsecured, short-term debt instrument issued by corporations to raise funds. It's a cost-effective way for companies to access immediate cash.
____ __________ _______ __________ __________ ____ _______ _______ _________ _______ __________ ______.
___ _________ _________ __________ ___ _________ ______ ____ __________ _____ ______ _______.
________ __________ _____ _________ ____ _______ ________ ________ ____ ____ _____ ______.
______ ____ ________ _______ ________ ____ ________ ________ ________.
___ ______ ________ _________ _____ _____ ___ ____ ________ ________ ________.
___ ____ ________ ______ __________ ___ _______ ________.
_______ ______ _______ _________ __________ ________ _____ _________ ____ ____ ______.
______ ____ _________ ________ _________ ______ _______ ____.
____ ___ _________ _________ ____ __________ ___ ___ ________ _______.
__________ _____ _________ ___ _______ _____ ____ ____ ________ ____.
_____ __________ ___ __________ ___.
_____ ______ _______ ____ ___ _______ ____ _______ _____.
__________ _________ ________ ____ _________ _______ ____.
____ ______ _____ ______ ___ ___ _____ _____ ______ ___.
________ ______ ______ __________ _______ ___ ______ _________ _______ ______ ___.
_______ ________ ______ ______ _________ _________ ______ __________ __________.
______ ________ ________ __________ ________ _______ _____ ______ _________ _______.
_______ ___ ________ _________ _______ ___ ________ ______ ________ ________.
_____ ____ _____ _________ ___ ______ ________ ________ ___ ______ _____.
____ _________ __________ ____ _____ ___ _______ _______ ____.
______ __________ ______ _______ _______ __________ ________ ____ ______ _____.
_________ _________ ______ __________ ___ ________ _____.
_______ _______ ____ _________ _________ ____ ____ _________ __________.
___ _________ ___ _______ ________ _______ _________ _________.
________ ______ ____ ________ ____.
_____ _________ ___ ______ _____ _______ ________ ___ _____.
_____ ______ __________ _____ ____ ______ _______ ______.
____ ______ _____ ___ _______ ___.
________ _________ ____ __________ _______ ___ __________ _____ ________.
_____ _____ _____ __________ _________ ____ ___.
________ _______ _________ ____ ________ _______ ________ _______ _________ ________.
- Solved Assignments
- Study Notes
- Guess Papers
- Question Papers
✓ Unlock up to 60% of the answer
✓ No payment required