1 CHAPTER 6 Money Markets. 2 CHAPTER 6 OVERVIEW This chapter will: A. Provide a background on the most popular money market securities B. Explain how.

Slides:

Advertisements

Similar presentations

6 Money Markets. Chapter Objectives Provide a background on money market securities Explain how institutional investors use money markets Explain the.

Advertisements

Money Market Instruments. n money market instruments are defined as debt instruments with a maturity of one year or less. Money Markets serve important.

5-1 Chapter 5 Money Market Instruments. 5-2 Money Market Instruments United States treasury bills Federal funds Repurchase agreements Commercial paper.

Financial Markets and Institutions 6th Edition

Money Markets Money Market Instruments. Chapter 11: Money Market Instruments © Oltheten & Waspi 2012 Money Market Instruments  Treasury Bills  Commercial.

Characteristics of Taxable Securities Money Market Investments Highly liquid instruments which mature within one year that are issued by governments and.

4-1 Business Finance (MGT 232) Lecture Business Finance Introduction Introduction (Financial Environment)

©2009, The McGraw-Hill Companies, All Rights Reserved 5-1 McGraw-Hill/Irwin Chapter Five Money Markets.

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license.

The Money Markets Dr. Lakshmi Kalyanaraman1. Characteristics Sold in large denominations Have low default risk Mature in one year or less from their original.

Chapter Eight The Money Markets Copyright © 2004 Pearson Education Canada Inc. Slide 8–3 The Money Markets Money Markets Defined 1.Money market securities.

1 FINANCIAL MARKETS AND INSTRUMENTS LECTURE 1b - INTRODUCTION.

ECON305, Maclachlan, Fall 2006 Money & Banking Introduction Chapters 1 & 2 Week 1.

Contemporary Investments: Chapter 3 Chapter 3 DIRECT INVESTMENT ALTERNATIVES What are money market instruments? What are bonds and other long-term fixed.

McGraw-Hill/Irwin © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved. Financial Securities CHAPTER 2.

Chapter 6: Money Markets

J. K. Dietrich - FBE Fall, 2005 The Money Market and Money-Market Instruments (1) Week 10 – October 26, 2005.

Part IV Financial Markets. Part IV Financial Markets.

The Money Market. The money market is the market for short term debt – that is, debt that matures in less than or equal to one year. The main instruments.

Chapter 1: Role of Financial Markets and Institutions

Chapter 5 Money market Dr. Lakshmi Kalyanaraman 1.

Financial Assets (Instruments)

An Introduction to Financial Management  2002, Prentice Hall, In.

Copyright © 2000 Addison Wesley Longman Slide #9-1 Chapter Nine THE MONEY MARKETS Part IV Financial Markets.

McGraw-Hill/Irwin © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved. Financial Securities CHAPTER 2.

1 PART VI Commercial Banking. 2 CHAPTER 17 Commercial Bank Operations.

CHAPTER 7 Money Markets. Copyright© 2003 John Wiley and Sons, Inc. Overview of the Money Market Short-term debt market - most under 120 days. A few high.

McGraw-Hill/Irwin © 2004 The McGraw-Hill Companies, Inc., All Rights Reserved. A Closer Look at Financial Institutions and Financial Markets Chapter 27.

ALOMAR_212_4 1 Financial Market Instruments. ALOMAR_212_42 What are the securities (instruments) traded in the financial market? 1- Money Market Instruments:

Chapter Six Money Markets © 2001 South-Western College Publishing Company.

Essentials of Investments © 2001 The McGraw-Hill Companies, Inc. All rights reserved. Fourth Edition Irwin / McGraw-Hill Bodie Kane Marcus 1 Chapters 1.

By, Meera N. Pre 1992-restrictions on foreign investment,poor governance,securities contract act,floor based trading,no investor protection Post 1992-sebi.

Financial Markets & Interest Rates. Financial System Surplus Economic Units Surplus Economic Units Deficit Economic Units Deficit Economic Units.

Copyright © 2002 by The McGraw-Hill Companies, Inc. All rights reserved.

Financial Assets (Instruments) Chapter 2 Requests for permission to make copies of any part of the work should be mailed to: Thomson/South-Western 5191.

Principles of Finance 5e, Ch. 2 Financial Assets © 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a.

Financial Markets and Interest Rates Financial Management.

1 CHAPTER 7 Bond Markets. 2 CHAPTER 7 OVERVIEW This chapter will: A. Provide a background on bonds B. Explain how bond markets are used by institutional.

1 An overview of the financial system Mishkin, Chap 2.

Chapter 12 Supplement A: Fixed-Income Securities Chapter 12 Supplement A Fixed-Income Securities.

CHAPTER NINE The Investment Function in Banking and Financial Services Management

McGraw-Hill/Irwin © 2007 The McGraw-Hill Companies, Inc., All Rights Reserved. Financial Securities CHAPTER 2.

CHAPTER 6 Money Markets. Chapter Objectives n Provide a background on money market securities n Explain how institutional investors use money markets.

All Rights ReservedDr David P Echevarria1 CHAPTER 6 MONEY MARKETS.

MONEY MARKETS 1. 1.Money market securities are debt securities with a maturity of one year or less. 2.Issued in the primary market through a telecommunications.

Copyright © 2003 South-Western/Thomson Learning All rights reserved. Chapter 2 The Creation of Financial Assets.

1 CHAPTER 4 THE MONEY MARKET N. 2 Learning Objectives Describe the money market. Know the different types of financial instruments available in the money.

The Financial System Chapter 16.

The Creation of Financial Assets

1 Chapter 06 Understanding Financial Markets and Institutions McGraw-Hill/Irwin Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.

Securities Direct Claims –Money Market Securities –Capital Market Securities Debt Securities Equity Securities Indirect Claims –Derivatives –Commingled.

Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin CHAPTER 2 Asset Classes and Financial Instruments.

Class Business Homework – Solution Solution Group debates/presentations Stock-Trak – Clip Clip.

 Short Term Lending and Borrowing Principles of Corporate Finance Brealey and Myers Sixth Edition Slides by Matthew Will Chapter 32 © The McGraw-Hill.

Chapter 6 Bonds (Debt) - Characteristics and Valuation 1.

082SIS52 Ryu Soo-hyun. Money Market  Money Market - Subsection of fixed income market - financial market for short-term borrowing & lending - provides.

Role of Financial Markets and Institutions

An introduction to financial institutions, investments & Management

CHAPTER 7 Money Markets.

Financial Markets & Institutions ECN 324

CHAPTER 6 MONEY MARKETS All Rights Reserved Dr David P Echevarria.

CHAPTER NINE The Investment Function in Banking and Financial Services Management

Financial Institutions and Markets

Chapter Five Money Markets McGraw-Hill/Irwin.

Importance of credit markets

11: Money Market Instruments

Part 3 Debt Security Markets

Interest Rates and Risk

Presentation transcript:

1 CHAPTER 6 Money Markets

2 CHAPTER 6 OVERVIEW This chapter will: A. Provide a background on the most popular money market securities B. Explain how money markets are used by institutional investors C.Explain the valuation and risk of money market securities D.Explain how money markets have become globally integrated

3 A. Money Market Securities 1. Treasury Bills a. Investing in Treasury Bills b. Pricing Treasury Bills c. Treasury Bill Auction d. Estimating the Yield

4 A. Money Market Securities 2. Commercial Paper a. Ratings b. Volume of Commercial Paper c. Placement d. Backing Commercial Paper e. Estimating the Yield f. Commercial Paper Yield Curve

5 A. Money Market Securities 3. Negotiable Certificates of Deposit (NCDs) a.Placement b.Premium c.Yield

6 A. Money Market Securities 4. Repurchase Agreements a. Placement b. Estimating the Yield 5. Federal Funds 6. Banker’s Acceptances a. Steps involved in Banker’s Acceptances

7 B. Institutional Use of Money Markets 1. Types of Financial Institutions a.Commercial Banks b.Finance companies c.Money market mutual funds d.Insurance companies e.Pension funds

8 C. Valuation and Risk of Money Market Securities 1. Explaining Money Market Price Movements a. Market price should equal the present value of the future cash flows discounted at the b. Required return on the money market security which is composed of the c.Short-term risk-free Interest Rate plus d. The Risk premium of the issuer

9 C. Valuation and Risk of Money Market Securities 2. Efficiency of Money Market Securities a.in general, these markets are perceived to be efficient b.most are subject to large trading volumes

10 C. Valuation and Risk of Money Market Securities 3. Risk of Money Market Securities a. Credit risk b. Measuring risk

11 D. Globalization of Money Markets 1. Eurodollar Deposits and Euronotes 2. Euro-Commercial Paper 3. Performance of Foreign Money Market Securities