Question

In: Finance

Identify one important money market security. What is the need for this security and who are...

Identify one important money market security. What is the need for this security and who are the major participants in this security's market.

Solutions

Expert Solution

One of the most important money market security is Treasury Bill because it is always considered a risk free security and it is always used by various institutions as an instrument to determine the risk free rate in the short run. These treasury bills are backed by the government and they will be paid by the government under any situation so they are considered risk free.

Treasury bills are risk free securities and it is needed by government to issue the securities in the market and they will be subscribed by various public so treasury bills are securities which is denoting that one is entitled to get paid by government on certain duration.

Major participants in this security markets are mostly corporations Who need money for the shorter period of time and investors who are looking for a higher liquidity along with government who are going with the treasury bills.


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