Money Market and Product
Money Market 
What is money market and tell me
some feature about money market?Some features of the money market are:
1. High liquidity: These financial instruments can be bought or sold swiftly and readily on the money market with little effect on their price.
2. Low risk: Since money market instruments are frequently issued by governments, companies with excellent credit ratings, or financial institutions, they are thought of as low-risk investments.
3. Low return: Because money market instruments are less risky than other assets like stocks or bonds, their returns are lower.
4. Regulated market: To guarantee that the money market runs effectively and transparently, the market is governed by government organizations like the Securities and Exchange Commission (SEC).
5. Short-term maturity: Money market securities normally have a maturity time between one day and one year, which is less than one year.
The Reserve Bank of India (RBI) issues Treasury Bills as the government's short-term debt instrument. Here
are three instances of T-bills that are
frequently printed in India:
91-𝒅𝒂𝒚 𝑻-𝒃𝒊𝒍𝒍: This is the most popular variant of T-bills in India, with a maturity period of 91 days. Let's say the face value of a 91-day T-bill is INR 100,000, and it is issued at a discount of INR 98,000. At maturity, the investor will receive the full-face value of INR 100,000, resulting in a return of INR 2,000.
182-𝒅𝒂𝒚 𝑻-𝒃𝒊𝒍𝒍: Another common variant, the 182-day T-bill has a maturity period of 182 days. Suppose the face value of the T-bill is INR 200,000, and it is issued at a discount of INR 196,000. Upon maturity, the investor will receive a face value of INR 200,000, generating a return of INR 4,000.
364-𝒅𝒂𝒚 𝑻-𝒃𝒊𝒍𝒍: The 364-day T-bill has the longest maturity period among the T-bill offerings in India. Consider a 364-day T-bill with a face value of INR 500,000, issued at a discount of INR 490,000. At the end of the 364-day period, the investor will receive the full-face value of INR 500,000, yielding a return of INR 10,000.
𝐂𝐨𝐦𝐦𝐞𝐫𝐜𝐢𝐚𝐥 𝐏𝐚𝐩𝐞𝐫
In order to meet their short-term finance needs, businesses issue commercial paper, which is a type of short-term unsecured promissory note. These notes can mature in as little as a few days or as long as several months.
For example, a large multinational company may issue commercial paper to finance its working capital requirements or bridge gaps in cash flow. Investors, such as money market funds, purchase commercial paper and earn interest on their investment until the maturity date.
𝐂𝐞𝐫𝐭𝐢𝐟𝐢𝐜𝐚𝐭𝐞 𝐨𝐟 𝐃𝐞𝐩𝐨𝐬𝐢𝐭𝐬
Banks and other financial organisations offer time deposits known as certificates of deposit (CDs). Typically, they are for defined periods of time between a few months and several years.
Bank offers a 1-year Certificate of Deposit with a face value of INR 1,000,000 and an interest rate of 6% per annum. An investor purchases this CD. At the end of the 1-year term, the investor will receive the principal amount of INR 1,000,000 plus the interest earned, which would be INR 60,000 (calculated as 6% of INR 1,000,000).
Repurchase agreements
Repurchase agreements, or repos, are a form of short-term borrowing in which one party sells securities to another party and makes a commitment to buy those securities back at a later time at a marginally higher price. Financial institutions frequently employ repurchase agreements in the money market to raise short-term capital.
𝐈𝐧𝐭𝐞𝐫𝐛𝐚𝐧𝐤 𝐋𝐞𝐧𝐝𝐢𝐧𝐠
The borrowing and lending of money between banks is referred to as interbank lending. It gives banks the ability to manage their short-term liquidity requirements and uphold reserve standards.
For example, Bank A may lend funds to Bank B for a specific period, usually overnight, at an agreed-upon interest rate. This allows Bank B to meet its immediate cash requirements, while Bank A earns interest on the loaned amount.
Before investing your first dollar, learn the basics. An Investment Management Course teaches you to assess your goals, evaluate markets, and protect yourself against unnecessary losses.
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