International traders benefit from the acceptance houses and discount markets. It provides a facility to discount bills of exchange, and this provides immediate financing to pay for goods and services. The money market provides financing to local and international traders who are in urgent need of short-term funds. Here are the main functions of the money market: 1. Investors with excess money that they do not need can invest it in the money market and earn interest. The money market contributes to the economic stability and development of a country by providing short-term liquidity to governments, commercial banks, and other large organizations. A money market mutual fund is a professionally managed fund that buys money market securities on behalf of individual investors. Individual investors who want to profit from the money market can invest through their money market bank account or a money market mutual fund. Large corporations with short-term cash flow needs can borrow from the market directly through their dealer, while small companies with excess cash can borrow through money market mutual funds. Some of the instruments traded in the money market include Treasury bills, certificates of deposit, commercial paper, federal funds, bills of exchange, and short-term mortgage-backed securities and asset-backed securities. Money markets also allow individual investors to invest small amounts of money in a low-risk setting. It enables governments, banks, and other large institutions to sell short-term securities to fund their short-term cash flow needs. The money market is an organized exchange market where participants can lend and borrow short-term, high-quality debt securities with average maturities of one year or less.
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