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Money market ((The Federal Reserve (Fed Funds (To provide banks with an…
Money market
The Federal Reserve
Fed Funds
To provide banks with an immediate infusion of reserves
The U.S. Treasury Department
Treasury bills
To finance the national debt
Commercial banks
Negotiable certificates of deposit
a term security
Businesses
Repurchase agreements (repos)
to manage their liquidity and to take advantage of anticipated changes
Investment Companies
market their securities
Finance companies
Commercial paper
only the largest and most creditworthy corporations issue commercial paper
Property and casualty insurance companies
Maintain liquidity
Pension funds
take advantage of investment opportunities
Money market transactions do not take place in any one particular location or building
have an active secondary market
they are wholesale markets
dealers and brokers, operating in the trading rooms of large banks and brokerage houses
• They have low default risk
• They mature in one year or less from their original issue date
• They are usually sold in large denominations
Basic characteristics
The primary money market players and their financial instruments