Overview

This eCourse consists of two modules on money markets securities. Money market instruments are a very important subset of the credit markets offering liquidity and (usually) high credit quality to short-term investors. There are interest bearing and discount instruments to suit varied requirements.

Module 1 describes the essential features of t-bills, CDs, CP, and bankers’ acceptances. It examines the nature of these products, their features, how they are used, and their usefulness in today's markets.

Module 2 covers money market instruments, a key part of credit markets offering liquidity and high credit quality to short-term investors. It examines interest-bearing and discount instruments, structuring and pricing conventions, and their role as the foundation for complex capital market instruments and yield curves.

Objective

On completion of this course, you will be able to:
- Identify an overnight index swap and list its features
- Recognise the key characteristics of treasury bills (t-bills) and how they carry the least risk of all money market instruments
- Recall what repos are and the reasons for their popularity
- Identify the fundamental features of commercial paper (CP) and the key characteristics of the asset-backed CP market
- Identify the key features of certificates of deposit (CDs) and how CDs are transacted
- Recognize the key features of bankers' acceptances
- calculate the interest/discount, price, and yield for:
• Interest-bearing money market instruments such as standard deposits, certificates of deposit, and repos
• Discount instruments such as discount notes, commercial paper, and treasury bills

Content

Module 1: Money Market Securities - An Introduction
Topic 1: Money Markets Overview
Topic 2: Overnight Index Swaps
Topic 3: Treasury Bills
Topic 4: Repos
Topic 5: Commercial Paper
Topic 6: Certificates of Deposit
Topic 7: Bankers’ Acceptances

Module 2: Money Market Securities – Pricing
Topic 1: Pricing Money Market Securities
Topic 2: Interest-Bearing Instruments
Topic 3: Discount Instruments
Topic 4: Comparative Yields