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CH05 - Chapter 5 Money Market Instruments 5-1 Money Market...

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5-1 Chapter 5 Money Market Instruments
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5-2 Money Market Instruments United States treasury bills Federal funds Repurchase agreements Commercial paper Prime rate Bankers acceptances Bank certificates of deposit Eurocurrency certificates of deposit Money market funds
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5-3 Repurchase Agreements Points in time 2:00 p.m. 5:00 p.m. 9:00 a.m. January 15 January 15 January 16 Dealer buys Dealer sells Dealer repurchases $450 million $400 million $400 million and of bonds of bonds as pays overnight repo interest Financing Needs of a Bond Dealer
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5-4 US money market Bankers’ Acceptances US bank US retailer Pays in future Bankers’ acceptance $ $ $ Goods Foreign producer Foreign bank
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5-5 Bank Borrowers Individuals and businesses Large CDs 7.5% Loans $ $ $ Deposit 6.9% Money market mutual funds Money Market Funds Fee = 0.10% Commercial paper 7% 5% Deposit $ $
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5-6 Quoting rates on a discount basis Let the number of days until maturity be t.
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