In the world of investment, one will come across many terms that relate to the different types of investments and how they operate. Among the terms is the money market investment, which basically refers to the global financing market that offers short term lending and borrowing for the investment world. It is faced with obligations like financing treasury bills, commercial papers and bankers acceptances.
Borrowing or lending by whichever party is done on a short term basis, which is normally not more than thirteen months in total. The borrowing and lending is captured on documents simply known as ‘paper’, which are the counterparts for the documents used in long term borrowing and lending. The paper is often referenced to the London Interbank Offered Rate.
The money market has a long history, having been started many years back. The commonly used instruments today include the bankers acceptance, which is a draft issued by a bank, and which is normally accepted as payment. It works in the same way as a cashiers check. The other instrument is the certificate of deposit, which is a document that shows the time of deposit and it also has a specific date of maturity. However, large certificates of deposit can be sold off before the date of maturity, but at an additional fee.
Repurchases agreements are also used in the money market, and they refer to the short-term loans, which are normally issued for less than two weeks and in many cases are issued just for a day. Commercial paper is an unsecured promissory note that has a fixed maturity period of upto 270 days. At the time of selling them off, this is done at a discount from the face value. The Eurodollar deposit, Municipal notes, Federal funds, Federal Short term Securities, Foreign Swaps and treasury bills are other instruments that are common in the money market and one can learn more about them online.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here
MONEY MARKET If You Enjoyed This Article, Make Sure You Read My Most Recent Posts Here
MUTUAL FUNDS 
