In addition, money market instruments generally have the following two characteristics: Money market instruments' maturities can last from one day to one year, with three months or less being the most common. So, a six-month CD would qualify as a money market instrument, but a two-year CD would not. For starters, we already mentioned that they have short maturities, defined as one year or less. Money market instruments have a few things in common. This isn't an exhaustive list, but some of the more common types of money market instruments include: There are several different varieties of money market instruments, issued by both companies and governments. For example, an investor who needs liquidity and has little risk tolerance may put some of their money into Treasury bills. Instead of obtaining funding for operating expenses or capital investment as they would with the capital markets, the money markets are often used to fund immediate operating expenses or to provide working capital.įrom an investor's point of view, the money market provides a safe place to invest without losing ready access to one's money. On the other hand, the "money market" is for funding over short time periods of one year or less. For example, a company may issue bonds in order to acquire another business, and will set the maturity date of those bonds for 10 years in the future. ![]() The "capital markets," which consist of stocks and bonds, allow institutions to raise capital for long-term purposes, which is generally defined as more than one year. ![]() There are two types of financial markets. There are several different varieties of money market instruments, but all have a few things in common. ![]() Money market instruments are used by corporations, governments, and individual investors seeking short-term funding or short-term places to invest money.
0 Comments
Leave a Reply. |