Money Market:

The money market refers to trading in very short-term debt investments. It

involves large-volume trades between institutions and traders at the wholesale level,
and includes money market mutual funds bought by individual investors and money
market accounts opened by bank customers at the retail level. The money market is
characterized by a high degree of safety and relatively low rates of return.

Money Market Instruments:

Money market instruments are short-term loans that provide operational
capital for businesses and governments. They are financial instruments that help
companies, corporations, and government bodies to raise short-term debt for their
needs.

Types of Money Market Instruments:

Money market instruments are short-term financial instruments that
are highly liquid and have a maturity of one year or less. Here are some of the major
types of money market instruments:

Treasury Bills (T-Bills):

These are short-term debt obligations backed by the U.S. government
with a maturity of less than one year. For example, a 3-month U.S. Treasury bill.

Commercial Papers:
These are unsecured, short-term debt instruments issued by a
corporation, typically for the financing of accounts receivable, inventories, and meeting
short-term liabilities. For example, a 90-day commercial paper issued by a large
corporation.

Certificates of Deposits (CDs):

These are time deposits offered by banks with a specific, fixed term,
and usually a fixed interest rate. For example, a 6-month CD offered by a bank.

Repurchase Agreements (Repos):

These are short-term borrowing for dealers in government securities.
For example, a dealer might sell government securities to investors on an overnight
basis and buy them back the following day at a slightly higher price.
Banker’s Acceptance:
This is a short-term debt instrument issued by a company that is
guaranteed by a commercial bank. For example, an importer might use a banker’s
acceptance to finance the shipment of imported goods.