Home > Money market

Money Market

The money market is a sector of the financial market where short-term borrowing, lending, buying, and selling of securities with maturities of one year or less occur. Common instruments in the money market include Treasury bills, commercial paper, certificates of deposit (CDs), and repurchase agreements (repos). The money market provides high liquidity and is used by institutions and governments for short-term funding needs.

Example

A company purchases a 6-month Treasury bill in the money market to park excess cash while earning a return on the short-term investment.

Key points

• A market for short-term financial instruments with maturities of one year or less.

• Provides high liquidity and is used by institutions for short-term funding.

• Common instruments include Treasury bills, commercial paper, and CDs.

Quick Answers to Curious Questions

The money market is a financial market for short-term borrowing and lending, focusing on instruments with maturities of one year or less.

They use it for short-term funding and liquidity management, as it offers low-risk, highly liquid instruments.

Treasury bills, commercial paper, and certificates of deposit are typical money market instruments.

scroll top