Are you willing to know the detailed information about the Instruments of Money Market? Here is the article which provides you the clean and clear information about Instruments of Money Market. As we knew that Money Market is the thing where financial instruments with high liquidity and very short maturities are traded. It is used by participants as a means for borrowing and lending in the short term, with maturities that usually range from overnight to just under a year.
- Treasury Bills, which is Issued by the Central Government, Treasury Bills are known to be one of the safest money market instruments available.
- Certificate of Deposits
- Commercial Papers
- Repurchase Agreements
- Banker's Acceptance
Treasury Bills:-
It is one of the short term borrowing instruments of the GOvernment of India, which enables the investors to park their short terms of excess funds while reducing their Market risk. They are sailed by RBI at regular intervals and they are issued at a discount to your face value.
Certificate of Deposits:-
It is short term security which is fixed at an interest rate and the maturity date is issued by a bank which seeks to raise funds from the secondary money market.
Commercial Papers:-
It is money-market security which is issued by large corporations to obtain funds to meet the short term debt obligations, and also it is a backed only by an issuing bank to pay the face amount on the maturity date which is specified on the note.
Repurchase Agreements:-
It is one of the forms of Short-term borrowing for all the dealers in government securities. In the other case, a dealer sells government securities to investors, usually on an overnight basis, and busy them back by the following day. This buying the security and agreeing to sell in the future is known as Repurchase Agreements.
Banker's Acceptance:-
It is a short-term credit investment created by a non-financial firm and guaranteed by a bank to make payment. The financial institution promises to pay the exporting firm a specific amount on a specific date, at which time it recoups its money by debiting the importer's account.
