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Introduction to Money Markets
By Dion Alken
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About this ebook
Money is a commodity that is traded in the market just like any other commodity. Traders come together to negotiate the price of money market instruments and foreign currency, and the terms of those transactions, either on their own behalf or for their customers. In this Course, you will learn how the money markets operate and you will be introduced to its components, language and terminology. When you complete the Introduction to Money Markets, you will be able to:
• Recognize the main characteristics of the domestic and foreign money markets.
• Recognize how the Treasury manages the bank’s cash flows using the money markets.
Calculate interest rates in its various forms and recognize how money is transacted in the market.
• Recognize the main characteristics of the domestic and foreign money markets.
• Recognize how the Treasury manages the bank’s cash flows using the money markets.
Calculate interest rates in its various forms and recognize how money is transacted in the market.
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Book preview
Introduction to Money Markets - Dion Alken
Introduction to Money Markets
Introduction to Money Markets
COURSE OVERVIEW
Money is a commodity that is traded in the market just like any other commodity. Traders come together to negotiate the price of money market instruments and foreign currency, and the terms of those transactions, either on their own behalf or for their customers. In this Course, you will learn how the money markets operate and you will be introduced to its components, language and terminology. When you complete the Introduction to Money Markets, you will be able to:
Recognize the main characteristics of the domestic and foreign money markets.
Recognize how the Treasury manages the bank’s cash flows using the money markets.
Calculate interest rates in its various forms and recognize how money is transacted in the market.
UNIT 1: DOMESTIC AND FOREIGN MONEY MARKETS
Objectives
Traders use the money markets to borrow and lend money on a relatively short-term basis. These transactions are documented with varying types of instruments, depending on the terms of the transaction.
When you complete this unit, you will be able to:
Define some instruments and terms used in money market transactions
Differentiate between money market instruments and capital market instruments
Differentiate between domestic money markets and foreign money markets
DOMESTIC MONEY MARKET
Characteristics
The (domestic) money market is a market in which money is borrowed and lent in exchange for financial paper -- money or near money -- that represents a sum one person or institution owes to another.
Money refers to paper or coin currency that has cash value today. You can use currency to purchase goods in the marketplace because the government guarantees that it will be accepted in exchange for goods and services. Near money refers to the financial paper that becomes payable in currency only after a specified time has elapsed.
DOMESTIC MONEY MARKET
Players
Money
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