Question

'Money market is an essential market for short-term funds.' Discuss.

Answer 1

A money market is a market where transactions are made in short-term securities or it is meant for those securities where the payment period is up to one year. Since their maturity period is very short, they are also termed as near money. These securities include call money, treasury bills, commercial bills, certificate of deposit, commercial paper, etc. Short-term financial instruments satisfy the requirement of short-term or working capital needs of commercial establishments.