Money Market Flashcards

1
Q

Trading in very short-term debt investments and seen as cash equivalents

A

Money Market

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2
Q

Short term financial instrument that trades in money market

A

paper

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3
Q

Banks lending and borrowing from each other

A

Interbank Lending

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4
Q

Participants in the money market

A
  1. Trading Companies
  2. Retail and Institutional money market funds
  3. Banks
  4. Central banks
  5. Cash Management Programs
  6. Merchant Banks
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5
Q

Functions of the money market

A
  1. Financing Trade
  2. Profitable investments
  3. Self- sufficiency of commercial banks
  4. Help to central bank
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6
Q

Secure short term loans to meet working capital requirements

A

Financing Trade

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7
Q

Enabled commercial banks to use their excess reserves in profitable investments. Earn profits without sacrificing liquidity

A

Profitable Investments

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8
Q

Meet requirements by recalling their old short-run loans

A

Self-sufficiency of commercial banks

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9
Q

Secure quick and widespread influence on the sub-market, facilitating effective policy implementation

A

Help to central bank

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10
Q

Types of Money Market Instruments

A
  1. Money Market Funds
  2. Money Market Accounts
  3. Certificate of Deposit
  4. Commercial Paper
  5. Banker’s Acceptance
  6. Repos
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11
Q

Mutual Funds offered by brokerages, investment companies financial services firms

A

Money Market Funds

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12
Q

Percentage fee charged on the fund for management expenses

A

Expense ratio

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13
Q

PDIC Insured, limited rights to withdraw money, interest are calculated daily and credited monthly

A

Money Market Accounts

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14
Q

Pros of Money Market

A

Extremely low risk
Maybe insured by PDIC
Highly liquid
Higher returns than most bank accounts

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15
Q

Cons of Money Market

A

Low returns that may not keep pace with inflation
Not all money market securities are insured
May have a high minimum investments/ withdrawal restrictions

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