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Culture Documents
instrument
Money Market Instrument
Investment in money market is done through
money market instruments
Money market instrument meets short term
requirements of the borrowers and provides
liquidity to the lenders
The most active part of the money market is the
market for overnight call and term money
between bank and institutions and repo
transaction.
Domestic Money Market Instruments
Treasury bills
Commercial paper
Commercial Bills
Federal funds
Banker’s Acceptance
Certificates of Deposit (CDs)
R
Municipal notes
Treasury Bill
The Treasury sells bills at regularly scheduled auctions to refinance
maturing issues and to help finance current federal deficits. It also sells
bills on an irregular basis to smooth out the uneven flow of revenues from
corporate and individual tax receipts.
Treasury bills are one of the safest money market instruments as they are
issued by Central Government. They are zero-risk instrument ,and hence
returns are not that attractive .t-bills are circulated by both primary as well
as the secondary market .They come with the maturity value of 3-months
,6-months and 1-year .
Commercial Paper
Commercial paper is an unsecured, short-term debt
instrument issued by a corporation, typically for the
financing of accounts receivable, inventories and
meeting short-term liabilities. Maturities on commercial
paper rarely range any longer than 270 days.