Question

Define Money Market And Features Of Money Market?

Answer 1

Answer:

Definition: Money market is a market for short-term loan or financial assets. It as a market for the lending and borrowing of short term funds.

The following are the general features of a money market:

   It is market purely for short-term funds or financial assets called near money.

   It deals with financial assets having a maturity period up to one year only.

   It deals with only those assets which can be converted into cash readily without loss and with minimum transaction cost.

   Generally transactions take place through phone i.e., oral communication. Relevant documents and written communications can be exchanged subsequently. There is no formal place like stock exchange as in the case of a capital market.

   Transactions have to be conducted without the help of brokers.

   The components of a money market are the Central Bank, Commercial Banks, Non-banking financial companies, discount houses and acceptance house. Commercial banks generally play a dominant in this market.

Explanation:

Answer 2

• The money market is a market for short-term funds, for a period of 364 days.
• Generally, the Money market is the origin of finance for working capital.
• Transactions of the money market include:

1. Lending and borrowing for a short period of time.
2. Purchase and sale of securities having a duration of 364 days.

• The money market does not have a fixed geographical location unlike stock exchanges but it includes all the institutions and organizations for short-term debt.

Features of the Money market are as follows:

1. The activities are carried out on a telephone, or mail basis.
2. It is a market for short-term trading.
3. It is not a homogenous market.
4. Assets or securities can be easily converted into cash.
5. Highly liquid
6. Transactions in the money market can be done with or without the use of a broker.