FINA 3720 Chapter Notes - Chapter 1-10: List Of Auto Parts, Growth Investing, Money Market Account
Document Summary
Money markets: includes short term, marketable, liquid, low risk debt securities. Money market instruments are sometimes called cash equivalents because of their safety and liquidity. Securities in capital markets are much more diverse than those found within the money market. Treasury bills (t bills), are the most marketable of all canadian money market instruments. They represent the simplest form of borrowing; the government raises money by selling bills to the public. Investors buy the bills at a discount rate. At the bills maturity, the holder receives a payment equal to its face value. The difference between the purchase price and the ultimate maturity value constitutes the investors earnings. Although money market securities are of low risk they are not risk free. Take the bills discount from par value and multiply by annualization then divide by par value. Rbey = [(1000 p) / p] x 365/n.
