Money Market Instruments

The money market instruments are amongst the safest forms of investment in the United States because the principals of these forms of investment are assured. The money market instruments are normally provided in the minimum denomination of $1 million.
The term periods of the money market instruments could vary from a single day to a year itself.
However the most commonly observed term periods are three months or less. The money market instruments are often sold in active secondary markets before they mature.

Banker’s Acceptance
The Banker’s Acceptance is a form of money market instrument. It is basically a draft provided by a bank that could be used as a form of payment just like a cashier’s check for example.

Certificate of Deposit
These are time deposits, in banks, that have a fixed date of maturity. The certificates of deposit that have comparatively bigger denominations are eligible to be sold off prior to maturity.

Repurchase Agreements
The Repurchase Agreements are primarily subscribed by government securities and are essentially short-term notes. These have term periods not exceeding two weeks. Quite often the holder of securities sells them to investors after which they agree on either a specified rate or date at which the securities may be bought back.

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Last Updated on : 26th June 2013

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