The money markets are concerned with very liquid securities investment products based upon cash-flows, with usually less than one year to maturity and without associated coupons. Typical investment products include government treasury bills, certificates of deposit, commercial paper, and short-term zero-coupon bonds.
Although investment yields are often lower than long-term bonds and other equity-based investments, the high liquidity in the money markets means you can get in and out of your positions relatively quickly and easily.
Therefore the money markets attract large investors such as insurance companies who may need to turn investments into cash at very short notice.
The key yield curve in the money markets is the Inter-Bank Offer Rate (such as LIBOR), which itself is closely related to the market riskless rate. Many corporate products (such as commercial paper) have yields based upon a 'spread' to floating Inter-Bank Offer Rates (i.e. they offer higher yields than bank-to-bank loans and treasury bills).
There are also four other key yield measures employed in the money markets.
These are the Bank Discount Yield, the Holding Period Yield, the (simple) Money Market Yield, and the Effective (compounded) Annual Yield.
This lecture discusses all four, how they are used, how they are related, and how they offer different kinds of short-term investment information.
Previous lecture: http://www.youtube.com/watch?v=iAbD-T2GfnE
Next lecture: http://www.youtube.com/watch?v=kGiluWlcaqI
For financial education from London to Singapore and beyond, please contact MithrilMoney via the following website:
This MithrilMoney lecture was delivered by Andy Duncan, CQF.
Please read our disclaimer:
In-Ground Pool Buyers Guide.
How to choose the right pump.
Choose from 3 filter types.
Learn about drain safety.
Heaters can extend your pool season.
Set the mood with pool lighting.
A safety cover is essential for your pool.
Learn about fence requirements.
Choose from 3 types of pool cleaners.
Keep your pool sparkling.
Personalize your pool with an in-ground spa.
Landscaping makes your backyard an oasis.
Deck and Patio.
A deck or patio can complete your pool.
Relax by your pool with patio furniture.
The most important aspect of owning a pool.
Choosing Your Materials.
Learn more about the Vinyl Pools and Vinyl Liners offered by Rising Sun Pools.
Learn more about the Fiberglass pool options offered by Rising Sun Pools.
Due to the custom nature of these pools, it can often take 60-90 days to build. Most Concrete pool projects start at 40,000.
Rising Sun Pools recalculates the pump size for every pool we build.