What is Money Market? Definition of Money Market, Money Market Meaning - The Economic Times (2024)

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What is Money Market? Definition of Money Market, Money Market Meaning - The Economic Times? ›

Definition: Money market basically refers to a section of the financial market where financial instruments with high liquidity and short-term maturities are traded.

The money market is defined as dealing in debt of less than one year. It is primarily used by governments and corporations to keep their cash flow steady, and for investors to make a modest profit. The capital market is dedicated to the sale and purchase of long-term debt and equity instruments.

Money Market. The part of the global financial market that deals with financial instruments that are easily converted to cash (highly liquid) and have very short maturities, usually one year or less.

A collective term for the many markets in which funds that are loaned for short periods to businesses or to governments are bought and sold.

Money market instruments are short-term financing instruments which can be converted easily to cash. Interbank loans (loans between banks), money market mutual funds, commercial paper, Treasury bills and securities lending and repurchase agreements, are all examples of money markets instruments.

A money market account is a type of account offered by banks and credit unions. Like other deposit accounts, money market accounts are insured by the FDIC or NCUA, up to $250,000 held by the same owner or owners. Money market accounts tend to pay you higher interest rates than other types of savings accounts.

Money market funds invest in low-risk assets like Treasury bonds, CDs, or short-term, high-quality corporate bonds with maturities of less than a year. Unlike stock or bond funds, they have a fixed price of $1 per share² —and money market funds aim to maintain their Net asset value (NAV).

Kids Definition

money market. noun. : the trade in short-term negotiable instruments (as U.S. Treasury securities)

Answer. The capital market is a part of the financial market that involves trading bonds, stocks, and debentures for a long period. Answer. The money market is the part of the financial market that involves borrowing and lending in the short term.

The money market is part of the fixed-income market that specializes in short-term debt securities that mature in less than one year. Most money market investments mature in three months or less. These are considered to be cash investments because of their quick maturity dates.

What bank has the best money market account? ›

Money is a medium of exchange; it allows people and businesses to obtain what they need to live and thrive. Bartering was one way that people exchanged goods for other goods before money was created. Like gold and other precious metals, money has worth because for most people it represents something valuable.

Open Demat Account Watch Video. The money market is an organized exchange market where participants can lend and borrow short-term, high-quality debt securities with average maturities of one year or less.

However, another way you can multiply your wealth through a Savings Account is by using it to make investments. And the most preferred and risk-free investment avenues are Fixed Deposits and Recurring Deposits. A Fixed Deposit is ideal for those who have a lumpsum amount and want to invest immediately.

Investors can purchase shares in money market mutual funds directly from brokerage companies or mutual fund firms, just as they would purchase shares in a stock or equity mutual fund.

While money market funds aren't ideal for long-term investing due to their low returns and lack of capital appreciation, they offer a stable, secure investment option for individuals looking to invest for the short term.

Money markets include markets for such instruments as bank accounts, including term certificates of deposit; interbank loans (loans between banks); money market mutual funds; commercial paper; Treasury bills; and securities lending and repurchase agreements (repos).

Because they invest in fixed income securities, money market funds and ultra-short duration funds are subject to three main risks: interest rate risk, liquidity risk and credit risk.

A money market account is also a deposit account that offers higher interest compared to a traditional savings account, but it also includes some capabilities more commonly found in traditional checking accounts, such as access to your funds via debit card or check.