Money Market

Financial commercial paper is issued by large financial institutions. In contrast to asset-backed commercial paper, financial commercial paper is issued by the institution directly and not via a conduit. Also, financial commercial paper is unsecured and the issuer does not pledge assets as collateral. Financial commercial paper is considered a low-risk asset because of its short maturity and the fact that its issuers are large institutions with strong balance sheets. (2010, Page 34)

Moderate risk. Purchasing a bond means giving a loan to a company. “T-Bonds” are bonds issued by the U.S. Treasury and are safer than corporate bonds. (Loaning money to the government is safer than loaning money to a private business.)

A measure of the money supply which combines any liquid or cash assets held within a central bank and the amount of physical currency circulating in the economy. The money supply is divided into two distinct categories: M1—assets that can be easily accessed and immediately used to purchase goods and service. These are referred to as liquid assets. Money deposited in checking accounts meets this criteria because checks represent demand deposits, as they are paid “on demand” for the cash in the account. This is money which is available immediately for spending and therefore fulfills the medium of exchange function of money. M2—all of M1 and assets that cannot be used directly as cash but can be easily be converted to cash. This monetary aggregate

A stock market is where you buy and sell stock. The New York stock exchange is an example.

Cash equivalents are described as safe investments that contain low amount of risks in which the result is virtually ensured. In most cases, there is a tendency to easily convert cash equivalents into cash, which may be used as collateral in certain cases. Notably, there are various kinds of investments that can be appropriately identified as cash equivalents. Some of the best examples of cash equivalents are interest bearing investments in which money market funds and Treasury bills are the most common type of asset. Short-term municipal bonds are also considered as cash equivalents, particularly those with a maturation period of approximately three months. Around the home, some financial instruments, money orders, and checks awaiting redemption can be understood as cash equivalents in some cases. The major advantages of cash equivalents include the fact that they are easily negotiable and easy to convert into cash and their ability to make it possible to buy goods and services without using credit cards or carrying cash ("What are Cash Equivalents?" n.d.).

Money is a term that shows every description of coin or bank-notes recognized by a consent as a representative of value effecting exchanges of property and payment debts. M1 consists of currency outside the U.S. Treasury, Federal Reserve Banks, and

Corporate bonds are one of the main products of the fixed income market. These instruments have similar features that of a bank loan, except that they can be transferrable from one lender (investor) to another, and can be traded in market which is known as corporate bond market. Trading is performed either on price or yield basis. Bond usually trades either at premium or at discount to its face value. The quality of the bond is derived from creditworthiness of the company or default risk. Based on potential default risk, bonds are evaluated on credit rating

M-1, the most commonly used because of its liquidity, consists of money used for payment. Checking accounts, deposits, and money in circulation. M-2 is savings accounts plus M-1. These are the center of America’s dual banking system. The difference between money and credit cards is explained through the textbook used in class. Money is described as funds earned, in hand available for use by the individual or business in ownership. A credit card is

As easily seen in the graph from the Federal Reserve’s Study (Reserve, Gerdes and Liu), the number of noncash transactions has greatly increased. Although the number of checks used has decreased greatly, Automated Clearing House transactions – which pass through the Federal Reserve’s control - are still a major player in the number of transactions.

There are two considerations when determining whether or not to invest in a debt product. These are the rate of return and the credit quality of the issuer. The credit quality of the US Treasury is very high, because the Treasury prints money. Thus, the holder of a T-bill knows for certain that the face value will be paid. The only question for the holder, then, is with respect to the real value of that payment. T-bills are a safe way to earn a small interest rate, and in that respect are often better than holding cash. Unless the financial institution is paying a higher rate on its accounts than the T-bill rate, cash will have a lower real return than a T-bill. However, this is possible, if the bank intends to reinvest that money at a higher rate, say in loans to consumers or small businesses. The bank might in that case offer a higher real rate of return than T-bills in order to entice customers to make deposits.

Some of these securities include debt securities, equity securities, common stock, and preferred stock. Lastly, financial markets provide the money needed by individuals and companies and establish the link between corporations and investors according to (Titman, Keown, & Martin, 2011).

The promissory notes are what funded the research and development part of the project. They are paid back over the long term. The commercial paper is what is funding the manufacturing of the Nexus 7. Commercial paper is a short term debt instrument typically used for financing short term liabilities (Investopedia). It is rarely issued for more than 270 days and usually is issued at a discount, which saves money on financing costs. The major benefit to commercial paper is it does not need registering with SEC as long as it is not more than the 270 days. Commercial paper is cost effective

Marketable Treasury securities are issued only in book-entry form at original issue. Book-entry securities are represented by accounting entries maintained electronically on the records of the Treasury, a Federal Reserve Bank or Branch, or financial institution. Definitive securities in the form of engraved certificates are no longer offered at original issue.

The second set of tools which involve the provision of liquidity directly to borrowers and investors in key credit markets. In this the government has introduced advantages to buy profoundly evaluated business paper at a term of three months and to give reinforcement liquidity for money market mutual funds (Federal Reserve, 2009).Also, the Federal Reserve and

Issue Commercial Papers – It is identified in (Short Term Finance:Commercial Paper, 2008) that a commercial paper is simply unsecured short-term debt instrument issued by an organization for meeting short-term liabilities. An advantage of issuing commercial papers is that only companies with high credit ratings can do so, therefore, a company like MRM can enjoy the prestige with such an issuance. Also it is cheaper than a bank loan as it has low interest rates. However a disadvantage could be that there are no flexibilities with regard to