Essay On Money Market Instruments

The commodities that are traded or dealt in a financial market are financial assets or securities or better known as financial instruments. There is a variety of securities in the financial markets as the requirements of lenders and borrowers are varied. Financial assets or instruments represent a claim on the repayment of principle at a future date and/or payment of a periodic or terminal sum in the form of interest or dividend. Some of the examples of these financial instruments are equity share, preference shares, debentures and bonds.
Financial instruments can be broadly classified into money market instruments and capital market instruments.
1. Money Market Instruments: The money market can be defi ned as a market for short-term money and financial assets that are near substitutes for money. The term ‘short-term’ means generally a period up to 1 year and near substitutes to money is used to denote any financial asset which can be quickly converted into money with minimum transaction cost. The sophistication and versatility of the money market is reflected in the diversity of money market instruments to suit the varied needs of market participants. Some of the important money market instruments are:
• Government Securities (G-secs)/Gilt-edged Government Securities,
•

Types of Financial Services
There is no such scheme of classification of financial services which may satisfy everyone or is able to cover all the subtleties of this industry. However, in order to understand the functioning of the financial services industry in a better perspective, their services have been classified under two broad categories, that is, fee-based and fund-based services.
Fee-based/Advisory Services: Fee-based financial services are those services wherein financial institutions operate in specialized fields to earn a substantial income by way of fees, dividend, commission, discount and brokerage on operations. The major fee-based financial services are as