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SS1: ECONOMICS - 3RD TERM

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  1. Mining | Week 1
    3 Topics
    |
    1 Quiz
  2. Financial Institution I | Week 2
    7 Topics
    |
    1 Quiz
  3. Financial Institutions II | Week 3
    5 Topics
    |
    1 Quiz
  4. Financial Institutions III | Week 4
    5 Topics
    |
    1 Quiz
  5. Business Organisation | Week 5
    3 Topics
  6. Money | Week 6
    5 Topics
    |
    1 Quiz
  7. Channels of Distribution I | Week 7
    5 Topics
    |
    1 Quiz
  8. Channels of Distribution II | Week 8
    6 Topics
    |
    1 Quiz
  9. Business Finance | Week 9
    7 Topics
    |
    1 Quiz



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The money market is the market for short term loans. The loans granted can be demanded at short notice.

The money market is composed of the commercial bank, the central bank, discount house, bill brokers, acceptance house or merchant banks, and the foreign exchange market. It is controlled by the central bank. The money market is a market for short-term instruments bought and sold.

Institutions Involved in Money Market:

The Institutions involved in the money market include:

  • Central Bank.
  • Commercial banks.
  • Discount houses.
  • Acceptance houses.
  • Finance Houses.
  • Insurance Companies.

Instruments used in the Money Market:

The instruments used in the money market include:

  • Bills of exchange.
  • Treasury Bills or Notes.
  • Call Money Funds.
  • Promissory Note.
  • Commercial Paper.

Treasury Bills: When the government goes to the money market to raise money, it does so by issuing treasury bills. Treasury bills are issued when the government needs money for a short period. These bills are issued only by the central bank, and the interest on them is determined by market forces.

Bill of Exchange: A bill of exchange is a binding agreement or promising note by one party to pay a fixed amount of cash to another party as of a predetermined date or on-demand, normally ninety (90) days.

Call Money Funds: Call money is minimum short-term finance repayable on demand, with a maturity period of one to fourteen days or overnight to a fortnight. It is used for inter-bank transactions.

Advantages of Money Market:

1. Promotion of Economic Development: The growth and development of the economy is enhanced through borrowing from the money market.

2. Extra Income is Created: There is a possibility of making extra income when money is invested in the money market.

3. Provision of Finance: Entrepreneurs and investors are able to raise enough finance, through borrowing from the money market, to run their various businesses.

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