Money Market Instruments

Money Market @ Guaranty Trust Bank.

The major purpose of financial markets is to transfer funds from lenders to borrowers. The money market refers to borrowing and lending for periods of a year or less.
A Money Market Instrument is a security with a maturity date of less than one year from the current date (treasury bills TB, Treasury Bearer Bonds TBB, bankers' acceptances BA, commercial paper CP, etc.) where transactions usually settle the same day.

Money market instruments are papers, which can be traded in the money market. They include:

Certificate of Deposit
Treasury bills
Treasury Bearer Bonds
Commercial Papers
Bankers Acceptance

A certificate of deposit is a document evidencing a time deposit placed with a depository institution. The certificate states the amount of the deposit, the date on which it matures the interest rate and the method under which the interest is calculated.

A Treasury bill is a government issued security with maturity of three months and renewable upon maturity. Treasury bills are sold at a discount to their maturity value.

A Commercial Paper is a short-term unsecured promissory note issued by corporations and foreign governments for many large, creditworthy issuers. Commercial paper is a low-cost alternative to bank loans.

A Bankers Acceptance (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.