Question

Explain features of money market instruments.

Answer 1

Money market is a market for short termmoney market are R.B.I., Commercial Banks, LIC, GIC, etc.money market is the source of finance for working capital. Transactions of money market include lending and borrowing of cash for a short period of time and also sale and purchase of securities having one year term or which gets redeemed (paid back) within one year period.

The features of money market instruments are as follows:

1. Market for short term.

2. No fixed geographical location.

3. Major Institutions involved in money market are R.B.I., Commercial Banks, LIC, GIC, etc.

4. Common Instruments of money market are Call money, Treasury Bill, CP, CD, Commercial bill, etc.