Definition of money market
Money market is some of the global financial market that deals with short term lending and borrowing. It is often used as a solution to short-term cash needs by government, large institutions and sometimes, indviduals. Some said that money market is quiet a low-risk investment, but they do not promise particularly a high gain of profit. Typically, transaction in money market will be of very short duration and will be of a particular type of dealing called ‘paper’. The papers are treasury bills, repurchase agreement and foreign currency swaps. Period of time the transaction may range from one day to 13 months, and it is actually short term approach that sets money markets apart from capital market.
According to Crowther, “ money market is a name given to the various firms and institutions that deal in various grades of near money ”.
According to Nadler and Shipman, “ a money market is a mechanical device through with short term fund are loaned and borrowed through which a large part of the financial transactions of a particular country or world are degraded. A money market a distinct from but supplementary to the commercisl bsnking system “.
A money market consists of a well organized banking system. Many financial instruments are used for transactions in money market. It is perfect mobility of funds in a money market. The transactions in money market is in a short term nature.
According to ‘qfinance dictionary’, money market means a market in which short term financial instruments such as certificates of deposit, treasury bills, commercial papers, and banks deposit are traded.
The common definition of money market is “a short term market that deals with different money market instruments”. There is a few important issues that should we know in order to understand what is money market. They are:-
* money market...