UNIT III: MONEY MARKET
What is the Money Market? The money market is a part of the financial market where short-term funds (≤ 1 year) are borrowed and lent. It helps governments, banks, and companies manage their immediate cash needs . 💡 Example: The Indian Government sells Treasury Bills (91 days) to raise funds. Infosys issues Commercial Paper (180 days) to pay suppliers. Key Features of Money Market ( How it differs from stock/capital markets) Short-Term Focus Money market deals in instruments that mature within one year, unlike the stock or capital markets which focus on long-term securities like shares and bonds. Example: A 91-day Treasury Bill is a typical money market instrument. Highly Liquid Instruments can be quickly converted into cash, making it easier for banks and companies to manage day-to-day needs. Example: Mutual funds often park surplus money in Commercial Papers (CPs) or T-Bills because they can easily sell them. Low Risk Most issuers are the gover...