MM

1.1.MM is a financial grocery with the borrowing and modify for the purpose of a year or less. The main economic custom of MM is to help economic units minimize the cost of hold m cardinaly balances required for day to day transactions, which is the cost in the form of foregone please. This money balance is to maintain close expenditures independently of silver receipts, because these immediate counterbalancement inflows and outflows dont very much coincide with each other. On the one hand, MM provides curt circumstanceinus loans for holders of temporary cash deficit. They meet their unequal term cash demand by maintaining access to MM and nurture financial resource when required. For example, MM loans atomic number 18 utilise to help corporations and governments pay up wages and salaries of their workers, make repairs, pay taxes and dividends and satisfy other short term, working capital needs. Borrowers in MM seek generally liquidity. Initially, ave rs a good circumstances depend on their current accounts (compulsory militia) held in central bank as primary liquidity. Since MM appe bed, it has supported banks with tributary liquidity. Banks hatful borrow and lend each other the funds from reserves (interbank market place) or buy and sell short term securities in MM. On the other hand, MM provides investment outlets for cash scanty holders. Lenders mainly seek nearty and opportunities to earn close to interest income.

They save the cost of holding cash, which is seen as one of the nearly perishable commodities by holding MM instruments that can be converted to cash quickly and at a comparatively low cost. MM instrument s be generally passing safe because of hig! hly creditworthy issuers or being guaranteed by them. They are issued in large principal amount. Maturities often cheat on from 1 day to 1 year. Most of them are often traded over telephone or computer network. There are certain conditions which must be met for a money market to exist. Firstly, there has to be a central bank unresolved and willing to act as a lender of birth resort to control risk, enable the...If you want to get a full essay, order it on our website: OrderEssay.net

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