MONEY MARKETS PROFESSIONAL ENGLISH IN USE FOR FINANCE

 

PROFESSIONAL ENGLISH IN USE FOR FINANCE 25. MONEY MARKETS

 

A The money markets The money markets consist of a network of corporations, financial institutions, investors and governments, which need to borrow or invest short-term capital (up to 12 months). B Common money market instrument ·           Treasury bills (or T-bills) are bonds issued by governments. The most common maturity- the length of time before a bond becomes repayable – is three months, although they can have a maturity up to one year. T-bills in a country’s own currency are generally the safest possible investment. They are usually sold at a discount from their nominal value – the value written on them – rather than paying interest. For example, a T-bill can be sold at 99% of the value written on it, and redeemed or paid back at 100% at maturity, three months later. C Repos Another very common form of financial contract is a repurchase agreement (or repo). A repo is a combination of two transactions, as shown below. The dealer hopes to find a long-term buyer for the securities before repurchasing them. EXERCISES 25.1 Are the following statements true or false? Find reasons for your answers in A and B opposites. 1 Organizations use the money markets as an alternative to borrowing from banks. 2 Money markets are a source of long-term finance. 25.2 Match the words in the box with the definitions below. Look at A and B opposite to help you. cash flow liquidity redeemed competitive maturity short-term discount per value unsecured     1 a price below the usual or advertised price 2 adjective describing a good price, compared to others on the market 3 the ability to sell an asset quickly for cash 25.3 Match the two parts of the sentences. Look at B and C opposite to help you. 1 Most money market securities 2 A treasury bill is safe because it 3 Commercial paper

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