NAME: Fatou B Sonko
NIM: 230502110207
TOPIC: Money and Capital Market
1. Money Market:
The money market refers to the financial marketplace where short-term borrowing and lending of funds occur, typically for periods ranging from a few days to one year. It is where institutions and investors trade in highly liquid and low-risk instruments like Treasury bills, certificates of deposit, commercial paper, and short-term government bonds.
The money market serves several important functions in the economy, including providing a source of liquidity for governments, financial institutions, and corporations to meet short-term funding needs. It also acts as a benchmark for short-term interest rates and serves as a mechanism for the central bank to implement monetary policy by influencing short-term interest rates.
Participants in the money market include commercial banks, central banks, corporations, mutual funds, pension funds, and individual investors. The money market is known for its high level of safety and liquidity, making it an attractive investment option for those seeking to preserve capital and maintain easy access to funds.
*Money market instrument:
Money market instruments are short-term, highly liquid financial assets that are generally considered very safe and low-risk investments. They are issued by governments, financial institutions, and corporations to raise capital. Some examples of money market instruments include Treasury bills, certificates of deposit (CDs), commercial paper, and banker's acceptances. Investors often use these instruments as a way to park their cash temporarily and earn a modest return with relatively low risk.
*Function of money market:
  1. Provides short-term liquidity to financial institutions, governments, and corporations.
