What is the definition of a money market instrument?
Understand the Problem
The question is asking for the definition of a money market instrument. Money market instruments are short-term debt securities that are typically used to manage liquidity and fund short-term financing needs. They include instruments like treasury bills, commercial paper, and certificates of deposit.
Answer
Short-term financing instruments easily converted to cash.
Money market instruments are short-term financing instruments that can be converted easily to cash, typically with maturities of one year or less. Examples include Treasury bills, interbank loans, commercial paper, and certificates of deposit.
Answer for screen readers
Money market instruments are short-term financing instruments that can be converted easily to cash, typically with maturities of one year or less. Examples include Treasury bills, interbank loans, commercial paper, and certificates of deposit.
More Information
Money market instruments are known for their liquidity and safety, making them ideal for short-term borrowing and lending operations in the financial markets.
Tips
A common mistake is confusing money market instruments with longer-term securities, which are part of the capital market, not the money market.
Sources
- Money Markets: What They Are, How They Work, and Who Uses Them - Investopedia - investopedia.com
- Money Market Instruments - Definition, Types, Features & Benefits - Aditya Birla Capital - mutualfund.adityabirlacapital.com
- Money Markets - How They Work and Instruments Used - International Monetary Fund - imf.org
AI-generated content may contain errors. Please verify critical information
