- Information
- AI Chat
Components OF Money Market
Economics
University of Calcutta
Recommended for you
![Economic and social development by mk yadav [@Upsc Pdf Drive]](https://d20ohkaloyme4g.cloudfront.net/img/document_thumbnails/6b976e52e96da8533c772a157831f7b5/thumb_300_424.png)
Preview text
SUB- PARTS OR COMPONENTS OF MONEY MARKET
The money market is a financial market where short-term financial instruments are traded. It consists of several components or sub-markets, each serving a particular purpose for the participants. Here are the main components of the money market: 1. Treasury Bills Market: This is a market where the government issues short- term debt securities, known as treasury bills, to finance its short-term cash needs. Treasury bills are considered to be low-risk investments because they are backed by the full faith and credit of the government. 2. Commercial Paper Market: This market involves the issuance of short-term unsecured promissory notes by corporations to finance their working capital needs. Commercial paper is generally considered to be a safe investment because it is usually issued by companies with strong credit ratings. 3. Certificates of Deposit (CDs) Market: CDs are time deposits issued by banks and other financial institutions. They are a popular investment option for people who want to earn a higher interest rate than they would get from a savings account. The CDs market is a crucial component of the money market because it helps banks to raise funds for their lending activities. 4. Repurchase Agreements (Repos) Market: In this market, one party sells a security to another party and agrees to repurchase it at a later date for a
slightly higher price. Repos are commonly used by banks and other financial institutions to manage their short-term cash needs. 5. Banker's Acceptances Market: Banker's acceptances are short-term credit instruments used to facilitate international trade. They are typically issued by a bank on behalf of a customer who needs to make a payment to an overseas supplier. Overall, the money market is an important part of the financial system, as it provides a source of short-term funding for corporations, governments, and financial institutions.
Components OF Money Market
Course: Economics
University: University of Calcutta
- More from:EconomicsUniversity of Calcutta999+ Documents
