You are the assistant treasurer for a company. Your company has $10 million in excess cash that it does not plan to use for the next three months. These funds, however, include some contingency funds...

MEMO
Date : 24 December, 2012
To : Board of directors
From : Assistant Treasurer
Subject: Money market investments and utilization of excess money.
I appreciate the decision of management to select me for writing this memo. I am writing
this memo to make you aware about various money market instruments and various aspects
related to them. The basic motive behind writing this memo is to inform the top management
about various short term investments where company can invest its surplus money and derive
better returns.
Money market instruments (MMIs) is a critical financial market where the instruments
with high liquidity and short duration are traded. MMIs market has gone under significant
changes as the result of financial crisis. In other words money market instruments are short-term
corporate unsecured promissory notes which are highly liquid.
The basic purpose of MMIs is to transfer the funds form the hands of the lender to the
borrowers. Market participants differentiate the “capital market” and “money market” with
reference to the time period, according to the market participants anything beyond one year is to
be considered as capital market and rest other belongs to the money market. The concept of
money market aroused due to the mismatch of receipt of cash and expenditures, due to this
reason business units run out of cash when it is required whereas get surplus cash at many times
which lie ideal....