Answered: What is money market?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section: Chapter Questions

Problem 3QTD

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What is money market?

Definition Definition Financial market that deals in securities or assets that are short-term in nature. The money market is responsible for keeping up the liquidity of the businesses and the organizations. These securities are usually held for a period of 12 months or less and are issued by institutions that require cash or funds for their short-term cash flow requirements. The money market is regulated by the federal government.

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Step 1

Introduction:

Money market is a market for short period funds or financial assets. It deals with financial assets having a maturity period of one year. Money market deals with call money, notice money, repos, term money, treasury bills, commercial bill, certificate of deposit, commercial papers, interbank participation certificates etc.

Step 2

Money market:

Money market refers to institutional arrangements which deals with short term funds. In case of money market there is no specific place set aside where money is borrowed or loaned. In other words, the money market deals with near substitutes for money or near money like trade bills, promissory notes and government papers drawn for a short period not exceeding one year.

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