Discuss Forum
1.
Money market is a market for
- A. short -term fund
- B. short -term fund
- C. short -term fund
- D. short -term fund
Answer: Option A
Explanation:
A money market is a market for short-term debt instruments with maturities of one year or less. These instruments are highly liquid and are used for short-term borrowing and lending by banks, corporations, and governments. Common examples include Treasury bills, commercial paper, bank certificates of deposit, and repurchase agreements.
- Short-term lending and borrowing: The money market facilitates the borrowing and lending of funds for periods from a day up to one year.
- High liquidity: The instruments traded are easily convertible into cash with minimal loss of value, prioritizing safety and liquidity over higher returns.
- Participants: Key players include governments, banks, and large corporations that need to manage their immediate cash needs.
- Instruments: Examples of what is traded on the money market include:
- Treasury bills
- Commercial paper
- Certificates of deposit (CDs)
- Inter-bank loans
- Repurchase agreements (repos)
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