In the financial marketplace, a distinction is made between the capital markets and the money markets. The capital market is a source of intermediate-term to long-term financing in the form of equity or debt securities with maturities of more than one year. The money market provides very short-term funds to corporations, municipalities and the United States government. Money market securities are debt issues with maturities of one year or less. For more information, review our Money Market tutorial.

Characteristics
Money market instruments give businesses, financial institutions and governments a means to finance their short-term cash requirements. Three important characteristics are:

  • Liquidity - Since they are fixed-income securities with short-term maturities of a year or less, money market instruments are extremely liquid.

  • Safety - They also provide a relatively high degree of safety because their issuers have the highest credit ratings.

  • Discount Pricing- A third characteristic they have in common is that they are issued at adiscount to their face value.
Treasury Bills

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