The money market

The money market is a fixed income market with securities that have maturities of less than one year. The financial instruments traded on the money market is called discount securities, which means that the instruments are issued at a discount to the nominal amount (face value) that is amortized at maturity.

A money market offers securities that derives its value from interest. You can trade in treasury bills and certificates on the the money market. The money market is used for government borrowing, borrowing by banks and corporate borrowing. It is fairly safe to invest money on the money market and you get a guaranteed return. On the money market, it is less safe to invest in securities issued by companies. The interest rates on the money market are expressed as simple annual interest rates, which means that the interest rate for six months is half of the annual interest rate.