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FINANCIAL
MARKETS
CHAPTER 11
The Money
Markets
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Chapter Preview
We review the money markets and the securities
that are traded there. In addition, we discuss why
the money markets are important in our financial
system. Topics include:
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Who Participates
in the Money Markets?
We will discuss, in turn, each of the major
borrowers and lenders in the money
market.
Before we do that, lets examine some of
the current rates offered in the U.S. money
markets. Some of these rates have been
discussed in previous chapters. Other rates
will be explored throughout this chapter.
2012 Pearson Prentice Hall. All rights reserved.
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Who Participates
in the Money Markets?
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Treasury Bills
Federal Funds
Repurchase Agreements
Negotiable Certificates of Deposit
Commercial Paper
Eurodollars
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Bid Amount
$500 million
$600 million
$650 million
Bid Price
$0.9940
$0.9939
$0.9936
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Chapter Summary
The Money Markets Defined
Short-term instruments
Most have a low default probability
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U.S. Treasury
Commercial banks
Businesses
Individuals (through mutual funds)
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