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Introduction
There are numerous ways to invest a sum of money.
Whether you are looking for short-term or long-term investments, whether you have a large amount of money, or a small one, you have to search for the best alternative.
Risk is one of the factors when deciding to invest on a specific market. The money market offers an alternative to higher-risk investments, such as capital markets. The money market is better known as a place for large institutions and government to manage their short-term cash needs. However, individual investors have access to the market through a variety of different securities.
The Money Market
"The money markets are markets in which funds are lent and borrowed for short periods, usually a matter of moths, but sometimes for no more than a day."
In other words, money market specializes in very short-term debt securities, that matures in less than one year.
easily be bought or sold, without causing significant movement in the price.
Furthermore, they are considered to be very safe, because they are generally issued by governments, financial institutions and large corporations. As a result, the profit will be much lower.
Because of the fact most money market securities trade in very high denominations, individual investors are somewhat limited regarding investments on this particular market. So, the easiest way to enter this market is through a money market mutual fund or through a money market bank account.
We could say that there is no central trading floor or exchange. While most transactions are made over the phone or through electronic systems, some of them can be made directly, like T-bills.
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- The Money Market.doc