foxex: What is a 'Money Market'?

Wednesday, September 25, 2019

What is a 'Money Market'?

The money market is the trade in short-term debt investments. At the wholesale level, it involves large-volume trades between institutions and traders. At the retail level, it includes money market mutual funds bought by individual investors and money market accounts opened by bank customers.

In any case, the money market is characterized by a high degree of safety and a relatively low return in interest.

An individual may invest in the money market by buying money market funds, short-term certificates of deposit (CDs), municipal notes, or U.S. Treasury bills, among other examples.

Traders and institutions are more commonly the buyers for other money market products such as eurodollar deposits, banker's acceptances, commercial paper, federal funds, and repurchase agreements.

Related to "Money Market"

Getting to Know the Money Market

Understanding the money market, the organized exchange on which people can lend and borrow large amounts of money for a year or less.

Introduction To Money Market Mutual Funds

Learn about the easiest way to benefit from money market securities.

Money Market Funds: Advantages and Disadvantages

Money market funds are a safe, if not super profitable, place to put money. But there's no FDIC and fees can be high. Choose your fund with care.

Related Definitions

Treasury Bills – T-Bills

A Treasury Bill (T-Bill) is a short-term debt obligation issued by the U.S. Treasury and backed by the U.S. government with a maturity of less than one year. Considered a conservative investment product, these debt issues still include some downside risks the investor should understand.

Money Market Account

What is a money market account? It's an interest-bearing account at a bank or credit union, not to be confused with a money market mutual fund.

Certificate of Deposit (CD)

Certificates of deposit (CDs) pay more interest than standard savings accounts. Find the highest nationally available rates for each CD term here from federally insured banks and credit unions.

Commercial Paper

Commercial paper is an unsecured debt instrument issued typically for the financing of accounts payable and inventories and meeting short-term liabilities.