Money Market

Money Market: 

Money market means market where money or its equivalent can be traded. Money market consists of financial institutions and dealers in money or credit who wish to generate liquidity. In short it is a place where large institutions and government manage their short term cash needs.


Money Market and Capital Market:

1) Money Market is a place for short term lending and borrowing, typically within a year. It deals in short term debt financing and investments. Capital Market refers to stock market, which refers to trading in shares and bonds of companies on recognized stock exchanges.
2) Individual players cannot invest in money market as the value of investments is large, on the other hand, in capital market, anybody can make investments through a broker. Stock Market is associated with high risk and high return as against money market which is more secure.
3) In case of money market, deals are transacted on phone or through electronic systems. In capital market where trading is through recognized stock exchanges. 

Money Market Instruments:

i) Treasury Bills(T-Bills)
ii)  Repurchase Agreements( Repo or Reverse Repo)
iii)  Commercial Papers
iv) Certificate of Deposit
v)  Banker's Acceptance