The money market is one of the most important aspects of the financial markets. It is used for the assets that are involved in the process of borrowing and lending on a short term basis. The usual maturity periods are somewhere around one year or even lesser than that. Money Market Homework Help in economics is provided by Tutorspoint.
In case you are involved in the trading process in this line, it would involve many things like the treasury bills, the commercial papers, the certificates that would be needed for deposits, the banker’s acceptance, federal funds, the short lived mortgages, and also the securities that are asset backed. There are a number of things it provides. One of the most important ones would be the liquidity funding. This would be for the financing system seen globally. The two things that go hand in hand with the financial markets would be the capital markets and the money markets.
There are the financial institutions and also the dealers who deal in money or in credit. They are ready to either lend or borrow. The lenders and borrowers are doing this for a short term like for 13 months. The money market is usually seen to trade in the financial instruments for short term. They do it in the form of the financial instruments called as the paper. This is totally opposite to the concept that is seen in the case of the capital market which involves the long term funding. It is done in terms of the bonds and the equity.
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The major part of the money market is in the interbank lending. This lending and borrowing between the banks happens very often. There are various instruments that are involved in this case, which include the commercial paper, the repurchase agreements and also instruments of a similar kind. They are the instruments that have been already benchmarked in most of the cases. They are usually done to the London interbank offered rate. This would be done accordingly for the appropriate currency and also the term.
There are a number of finance companies that are funding by themselves. They do it by the way of issuing these large quantities of the asset backed commercial paper. They are the ones that are usually seen to be secured by the pledge for the eligible assets. These eligible assets would include auto loans, the credit card receivables, the mortgage backed securities, the commercial mortgage loans, the residential mortgage loans, and also any other similar financial assets.