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McGraw-Hill/Irwin Copyright 2008 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Learning Objectives
To understand the many roles and
functions performed by the money market.
10-3
Introduction
All the transactions in the financial markets may
appear to be the same: borrowers issue
securities that lenders buy
10-5
Key Borrowers and Lenders
in the Money Market
Corporate Borrowers
& Cash-Management
Customers Needing to
Government Invest Cash Surpluses Nonbank
Treasuries Financial
(borrowing and Institutions
redeeming
securities)
Security Money
Dealers & Center
Brokers Banks
Central Banks
(supplying funds and information
and promoting market stability)
10-6
Characteristics of the
Money Market
10-7
Characteristics of the
Money Market
Funds invested in the money market
represent temporary cash surpluses
10-8
Types of Risk Confronting Investors
10-9
Characteristics of the
Money Market
Original maturity is the interval of time between
the issue date of a security and its promised
redemption date
It can extend up to one year
It can be as short as overnight
10-15
Treasury Bills
Treasury bills (T-bills)
Direct obligations of the government
Have an original maturity of one year or less
10-17
Types of Treasury Bills
10-22
Dealers Borrowing and Lending
Activities In the Money Market
The bulk of the dealers operating capital is
obtained through borrowings from commercial
banks and other institutions
Heavily used two sources of funds
10-25
Commercial Paper
10-29
Markets on the Net
Federal Deposit Insurance Corporation at
www.fdic.gov
Primary Dealers - Federal Reserve Bank of
New York at
www.ny.frb.org/markets/pridealers-
listing.htm
U.S. Treasury Department Bureau of the
Public Debt at www.publicdebt.treas.gov
Treasury Direct at www.Treasurydirect.gov
10-30
Chapter Review
10-32
Chapter Review
10-35