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Money Market - 3 Video Lecture - BPSC (Bihar)

FAQs on Money Market - 3 Video Lecture - BPSC (Bihar)

1. What is a money market?
Ans. A money market refers to a financial market where short-term borrowing and lending of funds take place. It includes various instruments such as Treasury bills, commercial papers, certificates of deposit, and repurchase agreements.
2. How does a money market work?
Ans. In a money market, financial institutions and corporations borrow and lend funds for short periods, usually less than one year. The borrowers get access to short-term financing, while the lenders earn interest on their surplus funds. The interest rates in the money market are determined by supply and demand forces.
3. What are the benefits of investing in a money market?
Ans. Investing in a money market offers several benefits. It provides a relatively safe and low-risk investment option with liquidity, meaning that investors can easily convert their investments into cash. Money market investments also typically offer higher interest rates compared to traditional savings accounts.
4. What are the risks associated with a money market?
Ans. Although money market investments are generally considered safe, there are still some risks involved. One risk is the potential for default by the borrower, which could lead to a loss of invested funds. Another risk is the possibility of interest rate fluctuations, which can affect the returns on money market investments.
5. How can I invest in a money market?
Ans. There are several ways to invest in a money market. Individuals can invest in money market mutual funds offered by financial institutions, which pool funds from multiple investors to invest in money market instruments. Some banks also offer money market deposit accounts, allowing individuals to directly invest in money market instruments.
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