What are money markets?

An exchange market which is organised can be called a money market. Participants in this organised exchange market can lend and borrow short-term capital. That’s not all; they can also trade high-quality debt securities with an average maturity duration of one year or even less than that. It gives money to the governments and other financial institutions, such as banks and NBFCs, and likes to sell short-term securities.

This, in turn, helps fund their short-term cash flow requirements. Money markets also enable an individual investor to invest small capital in a low-risk setting. 

Functions of money markets

The money market is an integral component of a nation (as a capital entity) to stabilise its economy. It also enables the country to bring in developmental measures financially by allowing the government to liquidate their assets for the short term. And maintain the necessary cash flow required to run the country efficiently. All these are parts of money markets, and learn investment banking you need to know to make a career in this sector. 

But that is not all. The money market has many more roles to play. Some of the important functions of the money market are given below:

• Trade Financing

The money market finances local and international traders. It provides them with the short-term funds they require. They also facilitate the discounting for bills of exchange. 

Likewise, goods and services are funded by the money market. The money market also funds other economic units like agriculture and small-scale industries.

• Helps in Industrial Growth

Besides financing trade, the money market also provides capital for businesses of all sizes. It is an easy avenue for obtaining short-term loans to replenish working capital funds. It includes raw materials, employee payments or other miscellaneous expenses. With the help of financial bills and commercial provisions, borrowing short-term funds is part of the money market.  

Another aspect of the money market is a strange one, but it is an interesting one. The money market does not fund any long-term loans but impacts the capital market and helps the business procure long-term loans. The interest rates are benchmarked based on the prevailing interest rate in the money market.

• Assists in making policies for the central bank

The central bank, or the RBI (Reserve Bank of India), regulates the country’s monetary policies. They give the necessary directions to the Indian banking industry to decide the interest rates against the loans in the country. 

The combined money markets also help the central bank control and influence the subsidiary markets in the country. In this way, the money market helps the central bank to perform the function of policymaking efficiently.

• Makes commercial banks self-sufficient

The money market makes provisions for the commercial banks operating under them to invest their reserves that are in excess. It allows commercial banks to earn interest on the principal while maintaining the required liquidity. 

Bills of exchange and other short-term investments can be easily converted into cash to enable seamless customer withdrawals. They can even take short term loans when they face a shortage of funds. The money market often charges lower interest rates on short-term loans.

Instruments of money markets

For short-term lending and borrowing, the money market has several instruments. Have a look at them and try to understand their functions

• Treasury Bills

These are considered to be the safest instruments in the Indian money market. The reason behind this is that they are issued with a guarantee from the Indian Government. They have a maturity period of 1, 3, 6 or 12 months.  Sold at a discount at face value, both individuals and financial institutions can purchase them. 

• Function(s): They help in financing the central reserve’s deficits

• Deposit certificate

Commercial banks and brokerage firms both can issue it. The maturity date spans between 3 months to 5 years. If you withdraw before the maturity period, you face a penalty. 

• Function(s): It provides the money markets with the required liquidity

• Bankers Acceptance

A firm may issue a short-term debt fund, but a bank needs to guarantee it. Maturity lies between 1 to 6 months. These are often used in international trade.

• Function(s): Helps the funds to move in the international markets.  

Do you want to have an investment banker career? Why don’t you learn it from the best institute in India, Imarticus Learning? The Certified Investment Banking Professional course is one of the best in India and will teach you all about investment banking and the money market. 

Agile and active career planning in times of uncertain money markets

The money market refers to short-term debt investments or trade between banks and other financial institutions. The period of investment varies from 90 days to 270 days. Certificates of Deposits, Treasury Bills (Government Bonds), Commercial Papers, etc. are some of the instruments of the money market. 

Reasons behind Uncertain Money Markets

The last three years have been different and difficult for the money market. The concluding months of 2019 were the flag-bearers of gloom that rocked the world in unique ways, seldom witnessed by the human race. The Wuhan virus from China, which later came to be known as COVID-19, played havoc with human life for two consecutive years. Additionally, the world economy at large also suffered a tremendous setback. Gross Domestic Product declined due to a sharp drop in production. Many working middle-class people lost their jobs during this period. The worst hit was the poor working class, who worked solely on a ‘no work no pay basis’.

When factories stopped functioning and project construction came to a grinding halt, these people became helpless. During those times, the socio-economic situation of the world as a whole and India, in particular, was quite bad. As we were slowly recovering from the deadly disease by early 2022, the Russian invasion of Ukraine ushered in a new chapter of uncertainty in the money market. The war disrupted quite a few supply chain logistics and created several man-made crises. Energy in quite a few forms is the best example. Though the economies of the western countries including the US and Great Britain have been hit hard, India struggled to strike a balance. Meanwhile, the rapid socio-economic changes in China and the aftermath of its several virus-borne diseases have swayed potential investors of the west to other Asian nations.   

The impact of the Ukraine–Russia war is worst felt by the common people of the US and other western countries because of their continued funding of the war to support Ukraine. This may lead to the greatest recession in the year 2023. Great Britain has already started feeling the heat and the results of the latest mid-term election in the US are also a testimony. India has always tried to steer clear of all these controversies and has always put the interests of the nation first while taking a stand in foreign policy.

Agile and Active Career Planning

In the recent past, we have witnessed a very high quantum of lay-offs in renowned western companies and even a few cases in India. Most companies are now expected to ramp up their portfolio management with the help of Investment Bankers. Amidst these uncertain times, it is advisable to learn investment banking and take it up as a career option. 

Investment Banking

Investment banks are generally of two types with respect to the services that they offer — Bulge Bracket Investment Banks and Boutique Investment Banks. The first type covers those large multinational investment banks, which offer services to all types of clients in various types of industries. Government and corporate sectors and even large banks are their clients. However, Boutique Investment Banks cater only to one or two portfolios. They work for smaller clients in limited capacities.

Investment Bank Functions 

Large international investment banks like Goldman Sachs offer financial services and manage portfolios of a diverse clientele. Functions can be broadly classified into:-

1) Underwriting segment

2) Advisory segment

3) Investment management segment 

4) Investment and lending functions 

5) Institutional client solutions

Investment Banker Roles

Underwriting functions are those that an Investment Banker does to support an organisation in its process of creating an IPO/FPO etc. All the analysis a company goes through for a suitable merger and acquisition, valuation of a company, prediction analysis, etc. are advisory functions of an Investment Banker. Investment banks offer different financial products to their clients to invest and grow their money. The Investment Banks lend their own money to their clients and thus this function is a combination of investment and lending both. This function strengthens the Investment banker further in the process of helping their clients. The institutional client solution functions of an investment bank help their clients to solve several complex financial transactions, most of which are international. 

Broadly Investment Bankers have two types of roles — back-end bankers and front-end bankers. The ones who do the advisory analysis, financial models, valuation, etc., are the back-end bankers. However, those Investment Bankers who meet the clients and convince them of their products are called front-end bankers. 

Roadmap to Become an Investment Banker

Students may take up science or commerce in their higher secondary.  At the UG level, they must study a related field such as commerce, mathematics, economics, or statistics. Thereafter they must acquire the basic skills required to become an Investment Banker. These include Financial Modelling, Equity Research, Valuations, Merger and Acquisition analysis, Leverage Buyout analysis etc., with a top-notch knowledge of advanced Excel. Besides these, to become a front-end Investment Banker, students are required to learn several other soft skills, which will help them to face clients confidently. 

Conclusion 

The job of an Investment Banker is a very reputable and prestigious one. The Certified Investment Banking Operations Professional course by Imarticus offers both online as well as offline modes of training. This is a banking course with placement(s) that will guide you to become an Investment Banker and help you achieve your dream.  

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The fundamentals of money market funds: 2022 edition

When it comes to investing, the basics are often the most important. A good understanding of money market funds can help you make better decisions about your investments. This blog will walk you through what they are, how they work, and why they’re essential.

What is a money market fund?

It is a type of mutual fund. Generally, it stores cash and invests in higher-ranked securities with stable value. Money market funds are low-risk, low-return investments—they’re designed for investors who want to make sure they’ll have enough money at all times while still being able to access their investment at any time by withdrawing it into cash or exchanging its dollar value into another form of currency when needed. 

Money market funds also offer diversification benefits because they invest in different types of securities rather than just one type, as most stocks do; therefore, they balance out fluctuations in the market by providing support with other holdings instead.

Money market fund uses

 Unlike other types of funds, money market funds do not invest in long-term bonds or other high-yield investments. Instead, they focus on holding cash and checking accounts like savings accounts at banks and credit unions.

Money market funds preserve capital for investors who want access to their money quickly but don’t have time or desire to wait for interest with longer maturities (i.e., one year). They also offer low fees. They don’t need management fees because they only hold cash—no stocks or bonds are needed!

Restrictions for money market funds

The SEC regulates money market funds in the U.S. This regulatory body establishes the standards for the qualities, level of maturity, and range of permitted investments in a money market fund. 

The provisions require a money fund to invest primarily in the best-rated debt instruments, and these instruments must have a maturity of fewer than 13 months. The weighted average maturity (WAM) period for the money market fund portfolio must be 60 days or less.

Know the basics before getting started with a money market fund.

• Know what a money market fund is and how they work.
• Be aware of the risks involved with investing in money market funds, including potential losses.
• If you have a problem with your money market fund, you must contact your financial institution immediately so that they can assist in rectifying any issues relating to their products or services (e.g., selling securities).

Discover Money Market Course With Imarticus Learning

Learners can start a career in the financial markets with the aid of the Certified Investment Banking Operations Professional program. Learners who complete this investment banking course online will acquire the skills and knowledge required to succeed in banking and clearing services at all production stages. 

Course Benefits for Learners:

• Students will learn investment banking and financial services, including managing complex derivative products and securities throughout their trade-life cycles. 
• The student will also receive the support required to launch their career in investment banking. 
•  Finance, strategic planning, financial management, and the evaluation of investment prospects are all topics covered in the investment banking certification curriculum.

Visit our training centers in Mumbai, Thane, Pune, Chennai, Bengaluru, Delhi, Gurgaon, or Ahmedabad, or get in touch via the chat support system.

An introduction to the money market in a digital age

The money market is a significant financial market involving funds transfer between institutional investors (banks, insurance companies, and pension funds) and financial institutions. It is a place where individuals trade their savings for investment products such as bank deposits or bonds. 

What are the money markets?

There are many ways to invest and borrow money in the digital age. One of these is through a money market.

Money markets are where people and businesses can invest their money or borrow and lend it. Three main types of money markets are official (also called central), interbank (or wholesale), and unsecured. Money markets are open to all comers. They do not have regulatory oversight and therefore offer high transparency for their participants.

How does the money market work?

The money market is the financial market where short-term debt instruments get traded. It’s a place to go when you want to buy or sell something due within one year but don’t want to pay an interest rate.

The money market is different from all other types of markets in that it has no set price—it gets determined by supply and demand and constantly changes based on those factors. For example, if more investors buy shares than sell them at any given time, then prices will increase until supply equals demand (or vice versa). 

This leads us back to again: if more investors decide that they want fewer shares than there are available for sale at any given moment, then prices must fall until there’s enough supply again.

Who uses the money markets?

Financial institutions and corporations use the money market. Banks also use the money markets to fund their customers’ day-to-day transactions. Financial institutions such as insurance companies or hedge funds regularly use spot transactions with other financial institutions. 

Corporations use treasury bills (short-term loans) to finance long-term investments in projects and goods that are not immediately profitable but will yield future profits. At the same time, governments often borrow short-term from central banks at low-interest rates to fund their budgets without resorting to raising taxes or cutting spending programs. 

Finally, individuals can purchase Treasury bills or T-bills through brokers who act as intermediaries between buyers and sellers of these securities; these brokers charge fees for their services which vary depending on how much volume you buy/sell at any given time (more volume = higher cost per unit).

The money market is a primary part of the financial system. It provides liquidity to the financial system and helps enable efficient price discovery. It also plays a vital role in monetary policy, allowing central banks to influence interest rates. 

Discover Money Market Course With Imarticus Learning

Learners can start a career in the financial markets with the aid of the Certified Investment Banking Operations Professional program. Learners who complete this investment banking course online will acquire the skills and knowledge required to succeed in banking and clearing services at all production stages. 

Course Benefits for Learners:

• Students will learn investment banking and financial services, including managing complex derivative products and securities throughout their trade-life cycles.
• The student will also receive the support required to launch their career in investment banking.
•  Finance, strategic planning, financial management, and the evaluation of investment prospects are all topics covered in the investment banking certification curriculum.

Visit our training centers in Mumbai, Thane, Pune, Chennai, Bengaluru, Delhi, Gurgaon, or Ahmedabad, or get in touch via the chat support system.

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3 Reasons to Invest in Money Market Funds Now

Interest rates on money market funds have been falling for years. However, in the last few months, it’s clear that interest rates won’t go down much further. That means you should now invest in a money market fund to lock in some of the current low-interest rates and avoid even higher ones later down the road. 

Money market funds offer safety and liquidity at a low cost. If your goal is to earn extra cash now, you might consider getting involved with one of these investments as soon as possible.

Top 3 Reasons to Invest In Money Market Funds

Money market funds are one of the safest ways to invest your money because they don’t fluctuate in value like stocks or bonds. Because they’re liquid, you can get your money back at any time without paying any fees or interest charges—a massive advantage over long-term investments like CDs and Treasuries that tend to pay less interest over time.

Reason 1: For better returns on short-term surpluses

One of the reasons to invest in a money market fund is to achieve better returns on short-term surpluses. In addition to being safe and secure, money market funds also have low risk. They’re liquid investments that are easy to move out at any time, so you don’t have to worry about losing your investment if something happens along the way. Money market funds also offer a high rate of return – sometimes even higher than stocks! 

Reason 2: For steady returns

Money market funds are an excellent option for those looking to save money. These funds offer a steady rate of return and provide stability over other investment options like stocks, bonds, or real estate.

Reason 3: For an alternate savings instrument

Money market funds are a better option than bank deposits for those who want to save money but do not earn any interest on their savings. A money market fund is an investment vehicle that invests in short-term debt securities. These investments can get considered safe because they’re backed by the U.S. government and pay interest in addition to their low-risk profile—but they also have low returns, liquidity, and volatility risks associated with them!

Money market mutual funds are excellent for investors who want to save and invest their money. They offer low yields and steady returns, as well as a relatively low cost of administration compared to other investment options.

Explore a career in banking and Finance with Imarticus Learning

With the help of the Certified Investment Banking Operations Professional program, students can begin a career in the financial markets. Students who complete this investment banking course with placement will have the skills and knowledge necessary to succeed in banking, treasury, and clearing services at all stages of production. The investment banking course syllabus covers financing, strategic planning, financial management, and the valuation of investment prospects.

Course Benefits for Learners:

• Students will gain knowledge of financial services, including managing complex securities and derivative products and their trade-life cycles. 
• Students will get the assistance they need to start their careers in investment banking.
• Students who complete the money market course will receive an industry-recognized certificate.

Contact us through chat support, or drive to one of our training centers in Mumbai, Thane, Pune, Chennai, Bengaluru, Delhi, Gurgaon, or Ahmedabad.

Understanding the end of free money and stock market freakout in 2022

The end of free money has been a long time coming. You may have observed some volatility in the stock market recently.

It took some time to set in after last month, but markets went into a frenzy from Friday through Monday when they understood how serious the Fed is about battling inflation.

As a result, stocks had their worst start since 1939, with the S&P 500 falling over 16%. In a nutshell, the “free money” era of central banking ended. Since the outbreak, the Fed has backed markets through ultra-accommodative monetary policy, including near-zero interest rates and quantitative easing (QE). 

Stocks thrived as a result of these loose monetary policies. As long as the central bank continued infusing cash into the economy as an emergency lending tool, a safety net was put in place for investors seeking various types of risk assets.

The end of free money

The end of free money is coming, but it won’t be a good day for stock markets and the economy in general. The end of free money will impact everything from real estate to college loans to credit scores—and it may even affect how much you pay for your food at restaurants or buy clothes at retailers. 

It means that trillions more dollars are floating around than usual right now; if everyone wanted them all at once, then prices would rise dramatically as supply meets demand—but because people are saving less and investing less than they used to due to increasing rents/mortgages/student loans, etc., there aren’t enough people who want those extra dollars floating around to cause prices to go up too much!

The stock market crash in 2022 is a real possibility. That’s because the Federal Reserve, which sets interest rates for banks and businesses, will raise them to reduce inflation. 

A new normal for Stock

The new normal in the stock market is not a crash but a slow recovery. The bull run we’ve all come to know and love is over, and instead of getting ready for an imminent boom or bust scenario (which would be bad), we’re stuck with low growth rates for years to come.

It can be frustrating for investors who want actionable advice on how to get ahead in their portfolios—but don’t worry: there are ways around this situation! 

While all this is happening, we’re not sure what will happen to companies. The stock market has been one of the best investments for many years, but a lot can change in upcoming years. 

Learn investment banking courses with Imarticus Learning

A student may launch their career in banking and finance with the Certified Investment Banking Operations Professional program. This investment banking course with placement will provide students with the knowledge and abilities needed to excel in banking operations, treasury, and clearing services at all stages of production. 

Course Benefits for Learners:

• Students will learn about investment banking procedures, including handling complex securities and derivative products and their trade-life cycles.
• Students may be able to acquire the help they require to begin their careers in investment banking.
• After finishing the money market course and derivative markets online training, students will get an industry-recognized certificate.

Contact us through chat support, or drive to one of our training centers in Mumbai, Thane, Pune, Chennai, Bengaluru, Delhi, Gurgaon, or Ahmedabad.