A segment of the financial market in which financial instruments with high liquidity and very short maturities are

traded. The money market is used by participants as a means for borrowing and lending in the short term, from several days to just under a year. Money market securities consist of negotiable certificates of deposit (CDs), bankers acceptances, U.S. Treasury bills, commercial paper, municipal notes, federal funds and repurchase agreements (repos).

Investopedia explains Money Market The money market is used by a wide array of participants, from a company raising money by selling commercial paper into the market to an investor purchasing CDs as a safe place to park money in the short term. The money market is typically seen as a safe place to put money due the highly liquid nature of the securities and short maturities, but there are risks in the market that any investor needs to be aware of including the risk of default on securities such as commercial paper.

ReThe money market is a short term debt market that deals with different money

market instruments '- is the common money market definition . To understand the money market definition some important issues need to be discussed and they are themoney market instruments , the money market accountand the money market funds . Money Market Instruments The money market instruments are basically the tools through which investment in the money market is done. Themoney market instruments are discussed under the following heads:
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Treasury Bills: The Treasury bills are the short term money market security that mature in a year or less than that. The purchase price is less than the the face value. Certificate of Deposit: The certificate of deposit are basically time deposits that are issued by the commercial banks with maturity periods ranging from 3 months to five years. The return on the certificate of deposit is higher than the Treasury Bills because it assumes a higher level of risk. Banker's Acceptance: It is a short term credit investment . It is guaranteed by a bank to make payments. The Banker's Acceptance are traded in the Secondary market. EuroDollars : The Eurodollars are basically dollar- denominated deposits that are held in banks outside the United States. Repos: The Repo or the repurchase agreement is used by the government security holder when he sells the security to a lender and promises to repurchase from him overnight.
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