Презентация на тему "MONEY What do we need money for? What do we need from www.myshared.ru Table of Contents: - Introduction - Definition of Money Markets - Benefits of Money Markets for Businesses - Risks Involved in Money Markets - Conclusion
Introduction
Businesses always look for ways to maximize their profits and minimize their risks. One of the ways they do this is by investing in the money markets. The money markets offer businesses an opportunity to earn profits while keeping their funds safe. In this article, we will explore why businesses use the money markets.
Definition of Money Markets
The money markets are a part of the financial market where short-term financial instruments are traded. These instruments have a maturity period of less than one year. The money markets include treasury bills, commercial papers, certificates of deposit, and repurchase agreements.
Treasury bills
Treasury bills are short-term government securities that are issued to finance government operations. They are sold at a discount and redeemed at face value.
Commercial papers
Commercial papers are short-term unsecured promissory notes issued by corporations to raise funds. They are usually issued to finance short-term working capital needs.
Certificates of deposit
Certificates of deposit are issued by banks and other financial institutions. They are a type of time deposit that earns a fixed interest rate over a specified period.
Repurchase agreements
Repurchase agreements are short-term loans where securities are sold with an agreement to repurchase them at a higher price.
Benefits of Money Markets for Businesses
Businesses use the money markets for various reasons. Here are some of the benefits of using the money markets:
Low-risk investments
Money market instruments are considered low-risk investments. They have a low default risk and are highly liquid. This makes them a safe haven for businesses to park their excess funds.
Short-term financing
Money markets provide businesses with short-term financing options. These financing options are usually cheaper than long-term financing options. This makes them ideal for businesses that need to finance their short-term working capital needs.
Diversification of investment portfolio
Investing in the money markets helps businesses to diversify their investment portfolio. Diversification helps to spread the risks and increase the chances of earning profits.
Flexible investment options
The money markets offer businesses flexible investment options. They can choose from a range of financial instruments that suit their investment goals and risk appetite.
Risks Involved in Money Markets
Although money markets are considered low-risk investments, they are not entirely risk-free. Here are some of the risks involved in money markets:
Interest rate risk
The prices of money market instruments are affected by changes in interest rates. If interest rates rise, the prices of money market instruments fall, and vice versa.
Liquidity risk
Although money market instruments are highly liquid, there may be times when there is a shortage of liquidity. This can affect the prices of money market instruments and make it difficult for businesses to sell them.
Credit risk
Money market instruments are not entirely risk-free. There is always a risk that the issuer may default on their payments. This can lead to losses for businesses that have invested in these instruments.
Conclusion
In conclusion, businesses use the money markets to earn profits while keeping their funds safe. Money markets offer businesses low-risk investments, short-term financing options, diversification of investment portfolio, and flexible investment options. However, there are risks involved in money markets, such as interest rate risk, liquidity risk, and credit risk. Therefore, businesses need to carefully evaluate the risks and benefits of investing in money market instruments before making any investment decisions. LSI Keywords: financial market, treasury bills, commercial papers, certificates of deposit, repurchase agreements, low-risk investments, short-term financing, diversification, interest rate risk, liquidity risk, credit risk. NLP Keywords: maximize profits, minimize risks, excess funds, investment goals, risk appetite, investment decisions, investment portfolio, short-term working capital needs, highly liquid, default risk.