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MONEY MARKET

PRESENTED BY:

BRAISHNA AZEEM ANUM ALI JUNEJO HANIA RAIZ SAKEENA JAVAID SADIA NAWABI ALEENA

Topics to cover.
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Money Market
Characteristics of Money Market Difference between money and capital Market

Types of Money Market instruments


Advantages & disadvantages of Money market

instruments

MONEY MARKET
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The Money market is a place for large institutions

and the government to manage their short term cash needs. Money Market is the market where all securities of maturity 1 year or less than 1 year are traded. The distinguishing characteristics of the money market are in fact the dealing in short-term funds The instruments traded in money market are very liquid, less risky and as a result offer much lower returns than other securities.

Characteristics of Money Market Instruments


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Marketability (liquidity): The liquidity or marketability

of money market instruments is very high


Maturity: For money market instruments it is one year or

less and in most cases will be overnight or up to 7 days.


Default risk: Default risk of money market instruments is

relatively lower than capital market instruments.

Money Market vs Capital Market


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Money market
a) There is no subdivision in

Capital Market

There is classification between primary and money market secondary market b) Generally supplies funds for b) Supplies funds for long short term requirement. term requirement. c) The volume of money market transaction is much c) The volume of business of capital market is greater substantially less than the money market
a)

Money market
d) The number of money market

instruments are many ( T-bill, COD, Commercial paper, etc e) The principal participants are bankers, government, corporations, money dealers, SBP, etc.

Capital market d) The number of instruments in capital market are primarily bonds and shares e) The participants in capital market are general investors, brokers, dealers, under writers, corporate investors, Security and Exchange Commission etc.

LET US NOW SEE THE VARIOUS

TYPES OF MONEY MARKET INSTRUMENTS.

Types of Money Market Instruments:


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Treasury Bills

Bankers Acceptances
Commercial Papers CODs

Repurchase Agreements
Govt. Notes

ADVANTAGES AND DISADVANTAGES OF MONEY MARKET INSTRUMENTS


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ADVANTAGES It can be converted into cash quickly at a relatively low cost. Have low price risk due to their short maturities. Buyers sellers of such instruments can also meet their short term cash demands by maintaining access to the money market & raising funds when required.

DISADVANTAGES Rate of return is less. It is only used to raise short term money. Purchasing power of money goes down, in case of up in inflation.

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