Explain The Concept Of Money Markets?

Many people are confused by the term money markets and mistakenly consider it to be something related to currency but actually it is not. In fact it does not have physical existence like the stock market; instead trade is carried out over telephones and internet. These markets include the trading of all the instruments that are highly liquid that is, mature in less then a year. Some common examples are t bills, banker’s acceptances, commercial paper etc. These are so liquid, that is, they ca be converted into cash so easily that they are considered equivalents of money. These instruments do not carry an interest rate instead they are sold at a price lesser then their actual value or face value and at the maturity date you get the face value which is above what you paid for it. The purpose of the market is that investors who have access cash consider it better to invest it somewhere rather the keeping it idle. Money markets are a good choice because they can be converted into cash whenever a good opportunity arises.