Week 4 Lecture - Week 4 Money Markets 1203AFE Money Banking...

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Week 4. Money Markets 1203AFE Money, Banking and Finance Chapter 7 Monday 18 August 2008
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Objectives Outline the basic operation and role of the money market Explain the characteristics of money market instruments: T-notes Cash Repos Commercial paper Negotiable certificate of deposit Bank accepted bills Discuss the various participants in the money markets Describe the relationship among yields on the various money market instruments.
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Money Markets Money markets are a collection of markets each trading a short term financial security. Trading takes place over-the-counter according to particular conventions. The trading is facilitated by dealers who stand ready to offer buy/sell quotes to potential customers.
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Money markets are wholesale markets where trades are typically valued at more than $1 million. Settlement usually takes place through the clearinghouse Austraclear or the RBA’s RITS system. Money Markets
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The most important economic function performed by money markets is the facilitation of liquidity management. Money markets allow economic units to manage the mismatches that occur between cash payments and cash receipts. Money Markets
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Money Markets Cash Collections Cash Disbursements Timing differences between Invest idle cash Short term borrowing
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Roles of the Money Market Provides: An alternative flow-of-funds process for wholesale borrowers and investors The banking system with a source of liquidity The reference rate for short term funds The RBA with a means of conducting monetary policy
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Characteristics The characteristics of money market instruments are as follows:
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This note was uploaded on 06/09/2009 for the course ACCOUNTING 1203AFE taught by Professor Ms.mirellamalin during the Three '08 term at Griffith.

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Week 4 Lecture - Week 4 Money Markets 1203AFE Money Banking...

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