Question

State the features of money market.

Answer 1

Answer:

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.

Answer 2

Answer:

Explanation:

Money market instruments are the investment vehicles that allow banks, businesses, and the government to meet large, but short-term, capitalneeds at a low cost.

The duration is overnight, a few days, weeks or even months, but always less than a year. Meeting longer-term cash needs is fulfilled by the financial or capital marmets.

Features of Money Market  ;-

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.