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Types of Financial Instruments of Money Market

The document discusses several types of financial instruments in the money market: 1) Treasury bills are short-term securities issued by the U.S. Treasury to refinance debt and help finance federal deficits. 2) Certificates of deposit are time deposits placed with banks that specify the deposit amount, maturity date, interest rate, and how interest is calculated. 3) Commercial paper is a short-term unsecured note issued by corporations and foreign governments for low-cost financing without expensive SEC registration.

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Mian Abdul Haseeb
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403 views2 pages

Types of Financial Instruments of Money Market

The document discusses several types of financial instruments in the money market: 1) Treasury bills are short-term securities issued by the U.S. Treasury to refinance debt and help finance federal deficits. 2) Certificates of deposit are time deposits placed with banks that specify the deposit amount, maturity date, interest rate, and how interest is calculated. 3) Commercial paper is a short-term unsecured note issued by corporations and foreign governments for low-cost financing without expensive SEC registration.

Uploaded by

Mian Abdul Haseeb
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Types of Financial Instruments of Money Market

Treasury bills

Treasury bills are short-term securities issued by the U.S. Treasury. The treasury sells bills at regularly scheduled auctions to refinance maEagle Tradersg issues. It also helps to finance current federal deficits.
Certificates of deposit
A certificate of deposit is a document evidencing a time deposit placed with a depository institution. The following information appears on the certificate: - the amount of the deposit; - the date on which it matures; - the interest rate; and - the method under which the interest is calculated.

Commercial Paper

It is a short-term unsecured promissory note issued by corporations and foreign governments. It is a low-cost alternative to bank loans, for many large, credit worthy issuers. Issuers are able to efficiently raise large amounts of funds quickly and without expensive Securities and Exchange Commission (SEC) registration.
Bankers Acceptances

A bankers acceptance, or BA, is a time draft drawn on and accepted by a bank. Before acceptance, the draft is not an obligation of the bank; it is merely an order by the drawer to the bank to pay a specified sum of money on a specified date to a named person or to the bearer of the draft.
CAPITAL MARKET INSTRUMENTS SECURED PREMIUM NOTES SPN is a secured debenture redeemable at premium issued along with a detachable warrant,redeemable after a notice period, say four to seven years. The warrants attached to SPN gives the holder the right to apply and get allotted equity shares; provided the SPN is fully paid.

DEEP DISCOUNT BONDS

A bond that sells at a significant discount from par value and has no coupon rate or lower coupon rate than the prevailing rates of fixed-income securities with a similar risk profile.
FOREIGN CURRENCY CONVERTIBLE BONDS(FCCBs)

A convertible bond is a mix between a debt and equity instrument. It is a bond having regular coupon and principal payments, but these bonds also give the bondholder the option to convert the bond into stock. FCCB is issued in a currency different than the issuer's domestic currency.
HEDGE FUND

A hedge fund is an investment fund open to a limited range of investors that undertakes a wider range of investment and trading activities in both domestic and international markets. DERIVATIVES A derivative is a financial instrument whose characteristics and value depend upon the characteristics and value of some underlying asset typically commodity, bond, equity,currency, index, event etc.

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