The money market is a market for short-term financial assets that are close substitutes of money. The most important feature of money market instruments is that they are liquid and can be turned into money quickly at low cost and provides an avenue for equilibrating the short-term surplus funds of lenders and the requirements of borrowers.
We shall discuss following money market instruments:
Repo is a money market instrument, which enables collateralised short term borrowing and lending through sale/purchase operations in debt instruments. Under a repo transaction, a holder of securities sells them to an investor with an agreement to repurchase at a predetermined date and rate
Non-convertible debentures(NCDs) are a financial instrument that is used by companies to raise long-term capital. These are a debt instrument with a fixed tenure and people who invest in these receive regular interest at a certain rate.
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