The Money Market

The money market is a subsector of the fixed-income market. It consists of very short-term debt securities that usually are highly marketable. Many of these securities trade in large denominations, and so are out of the reach of individual investors. Money market funds, however, are easily accessible to small investors. These mutual funds pool the resources of many investors and purchase a wide variety of money market securities on their behalf.

Figure 2.1 is a reprint of a money rates listing from The Wall Street Journal. It includes the various instruments of the money market that we will describe in detail. Table 2.1 lists outstanding volume in 1999 of the major instruments of the money market.

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