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04.03.2010 09:46

According to cambridge online dictionary Money market is the system in which banks and other similar organisations buy and sell money from each other. Money market is the global financial market for short term borrowing and lending.
+Money market Funds.
Money market is the global financial market for short term borrowing and lending.It provides short term funding for global financial system.It is here the short term financial papers like commercial paper, treasury bills and bankers acceptance are being traded. It consists of financial institutions and agents who are interested in borrowing and lending.Most important feature of this market is its liquidity. You can buy and sell any time. The trading has an upward time limit of around 13 months.
Money market funds.

The most important Money market funds are as follows.

Treasury bills

Commercial papers

Certificate of deposit

Inter corporate deposits

Interbank participation certificate

Repo/reverse repo

Call notice/ term money

Money market in India is regulated by RBI and SEBI.

Certificate of Deposit

CDs are similar to savings accounts in that they are insured and thus virtually risk-free; they are "money in the bank" . They are different from savings accounts in that the CD has a specific, fixed term (often three months, six months, or one to five years), and, usually, a fixed interest rate. It is intended that the CD be held until maturity, at which time the money may be withdrawn together with the accrued interest.

Treasury Bills

Treasury bills (or T-bills) mature in one year or less. Like zero-coupon bonds, they do not pay interest prior to maturity; instead they are sold at a discount of the par value to create a positive yield to maturity. Many regard Treasury bills as the least risky investment available to U.S. investors.

Advantages of Money Market Funds.
There are many advantages of money market funds. It is considered as a low risk investment. People who invest here rarely make loss. All funds switch to money market funds at times to avoid making loss at times of volatility in the market. Money market funds offers more returns than the next alternative ie Bank savings.

Disadvantages money market Funds

There are some dis advantages associated with money market funds too. These funds are not considered as an investment worthy because the returns they promise on investments are very low. These works like bank savings and that makes it less exciting. With more and more new investment options coming people are getting more attracted towards investments other than money market funds.

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