Money Market Yield

Definition of 'Money Market Yield'


The interest rate earned by investing in securities with high liquidity and maturities of less than one year such as negotiable certificates of deposit, U.S. Treasury bills and municipal notes. Money market yield is calculated by taking the holding period yield and multiplying it by a 360-day bank year divided by days to maturity. It can also be calculated using bank discount yield.

Also known as "CD-equivalent yield".

Investopedia explains 'Money Market Yield'


To earn a money market yield, it is necessary to have a money market account. Banks offer money market accounts because they need to borrow funds on a short-term basis to meet reserve requires and to participate in interbank lending. The money market yield will be lower than the yield on stocks and bonds because of the low risk associated with money market investments.



Related Video for 'Money Market Yield'

comments powered by Disqus
Hot Definitions
  1. Jensen's Measure

    A risk-adjusted performance measure that represents the average return on a portfolio over and above that predicted by the capital asset pricing model (CAPM), given the portfolio's beta and the average market return. This is the portfolio's alpha. In fact, the concept is sometimes referred to as "Jensen's alpha."
  2. Direct Bidder

    An entity that purchases Treasury securities at auction for a house account rather than on behalf of another party.
  3. Mortgage Modification

    A permanent change in a homeowner's home loan terms that makes the monthly loan payments affordable.
  4. Leveraged Benefits

    The use – by a business owner or professional practitioner – of their company’s receivables or current income to secure a loan whose proceeds then indirectly fund a retirement plan.
  5. Direct Consolidation Loan

    A loan that combines two or more federal education loans into a single loan. A Direct Consolidation Loan allows the borrower to make a single monthly payment. The loan is facilitated by the U.S. Department of Education and does not require borrowers to pay an application fee.
  6. Through Fund

    A type of target-date retirement fund whose asset allocation includes higher risk and potentially higher return investments "through" the fund's target date and beyond.
Trading Center