We hope this tutorial has given you an idea of the securities in the money market. It's not exactly a sexy topic, but definitely worth knowing about, as there are times when even the most ambitious investor puts cash on the sidelines.
  • The money market specializes in debt securities that mature in less than one year.
  • Money market securities are very liquid, and are considered very safe. As a result, they offer a lower return than other securities.
  • The easiest way for individuals to gain access to the money market is through a money market mutual fund.
  • T-bills are short-term government securities that mature in one year or less from their issue date.
  • T-bills are considered to be one of the safest investments - they don't provide a great return.
  • A certificate of deposit (CD) is a time deposit with a bank.
  • Annual percentage yield (APY) takes into account compound interest, annual percentage rate (APR) does not.
  • CDs are safe, but the returns aren't great, and your money is tied up for the length of the CD.
  • Commercial paper is an unsecured, short-term loan issued by a corporation. Returns are higher than T-bills because of the higher default risk.
  • Banker's acceptances (BA)are negotiable time draft for financing transactions in goods.
  • BAs are used frequently in international trade and are generally only available to individuals through money market funds.
  • Eurodollars are U.S. dollar-denominated deposit at banks outside of the United States.
  • The average eurodollar deposit is very large. The only way for individuals to invest in this market is indirectly through a money market fund.
  • Repurchase agreements (repos) are a form of overnight borrowing backed by government securities.







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