Money Market is a market for short-term funds which deals in monetary assets whose period of maturity is upto one year.
Following are the money market instruments:
(a) Commercial Paper: A commercial paper is an unsecured promissory note, issued by a corporate firm with a fixed maturity period which varies from 15 days to 12 months. Since a CP is unsecured, it is issued only by a highly creditworthy, reputed leading firms. The original purpose of commercial paper is to provide short-term funds for seasonal and working capital.
(b) Certificate of Deposit: They are unsecured short-term negotiable instruments issued in bearer form. It is issued by the banks against deposits kept by companies and institutions. The tenure ranges from 91 days to one year. It helps to mobilise large amount of money for short period.
