2.3 : Money Market Instruments

Money market instruments, designed for liquidity management and capital preservation, offer a relatively secure haven for your investments. These short-term, low-risk financial securities are a reliable choice for those seeking stability in their financial portfolios.

Treasury bills are government-issued securities and are considered among the safest investments because the full faith and credit of the issuing government backs them. Due to their high liquidity and safety, Treasury bills typically offer lower yields, making them attractive for risk-averse investors.

Commercial paper represents short-term unsecured promissory notes issued by corporations with high credit ratings. It is not backed by collateral and carries a slightly higher risk than treasury bills, but it also provides a marginally higher return.

Certificates of deposit are time deposits offered by banks and credit unions with specific fixed terms. They usually pay interest at maturity. The government insures them up to a certain amount, making them low-risk investments.

Money market instruments, with their diverse risk/return profiles, play a crucial role in the financial markets. This variety empowers you to choose the instrument that best aligns with your investment goals and risk tolerance.