金融英语课件李丽 马跃ISBN 9787810788175 PPTchapter_6.pptVIP

Chapter 6 The Money Market Chapter 6 The Money Market All transactions carried out in the financial markets seem to be basically the same: borrowers issue financial assets that lenders purchase. Closer examination of the financial system reveals, however, that beyond the simple act of exchanging financial assets, there are major differences between one financial transaction and another. Different purposes for which money is borrowed result in the creation of different kinds of financial assets, having different maturities, risks, and other features, thus different financial markets. Money market is the market for short-term credit. 1. Characteristics of the Money Market Money market securities have three basic characteristics in common: They are usually sold in large denominations. They have low default risk. They mature in one year or less from their original issue date. Most money market instruments mature in less than 120 days. Money market transactions do not take place in any one particular location or building. Instead, traders usually arrange purchases and sales between participants over the phone and complete them electronically. Because of this characteristic, money market securities usually have an active secondary market. An active secondary market makes money market securities very flexible instruments to use to fill short-term financial needs. 2. The Purpose of the Money Markets The well-developed secondary market for money market instruments makes the money market an ideal place for a firm or financial institution to “warehouse” surplus funds for short periods of time until they are needed. Similarly, the money markets provide a low-cost source of funds to firms, the government, and intermediaries that need a short-term infusion of funds. Most investors in the money market who are temporarily warehousing funds are ordinarily not trying to earn unusually high returns on their money market funds. Rather, t