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The International Finance Assignment Help offered by the experts at Finance Help Desk is designed to meet the specific needs of students pursuing international finance courses.
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Money market functions as an important component of international financial system involving short term borrowing and lending across global economies. This market mostly concerns itself with instruments with a maturity starting from 1 day up to 1 year providing liquidity for the government, corporations as well as financial institutions.
According to the Bank for International Settlements (BIS), global foreign exchange market turnover (which includes money market instruments) averaged approximately $6.6 trillion per day in 2019. Knowledge of such instruments is essential for all finance students especially those aiming to pursue a course in international finance. The analysis of money market instrument enlightens the students with a comprehensive view on how the international finance systems address short-term funding requirements, maintain liquidities as well as managing risks. These instruments enable students to examine financial policies as well as make strategic decisions in the competitive market. In this ppt we will discuss the six money market instruments, their roles, examples and the importance for the finance students.
Overview Treasury Bills (T-Bills) are short term instruments which are issued by the governments in order to source funds. In USA, the Department of the Treasury offers T-Bills with different maturity dates like a few days to a year. These are cheaper than their face value and the investors get the face value at the maturity of the securities. International Relevance T-Bills are amongst the most traded financial products in the world because of their high liquidity as well as low risk. They act as basis for other short-term securities and are favored among central banks, financial institutions and investors interested in safe returns. For instance, Japan, Germany and the U. K. are among the countries that frequently use T-Bills in order to regulate their short-term debts. Example In 2020 as markets got upset by the COVID-19 crisis, investors around the world bought U. S. T-Bills considering its safety, making the yields almost zero. This was seen to illustrate the importance which T-Bills have in providing stability in the market during the period of volatility.
Overview Certificate of Deposits (CDs) is a time deposit given out by commercial banks with a fixed rate of interest with a specified date of maturity. CDs are very standardized and can be traded in secondary market before the due date. The primary reason for opting CDs is higher returns as compared to a saving account and its fixed-term maturity. International Relevance CDs are widely employed in global financial markets as an instrument for the short-term funding for banks. In the field of international finance, the Eurodollar CDs which is U. S. dollar denominated CDs are instruments that are issues outside US to manage liquidity. Example One of the most common examples of using CDs on an international level is when the European and Asian banks needed U. S. dollars funding to support international trade. According to the information given in 2019, the global banks bought a large volume of Eurodollar CDs to sustain their dollar reserves in the midst of tightening liquidity in the international market.
Overview Commercial paper is an unsecured form of the short-term debt instrument issued by corporate entities with the aim of financing its short-term liabilities such as inventories and accounts payable. Usually provided with a maturity of up to 270 days, it is cheaper option compared to loans. International Relevance Commercial Paper is an important money market instrument in the international markets especially for companies conducting business worldwide to fulfill their short-term obligations. Some of the majors providers of commercial paper include companies from countries such as the U. S., Japan, or Germany that usually seek funding in various foreign currencies. Example In mid of October 2008 during the financial crisis the commercial paper market became dormant, as investors anticipated defaults, leading to a liquidity shock for large non-financial corporations. As a result, governments engaged in measures that sought to create a balance in the market, including the U. S. Fed’s Commercial Paper Funding Facility (CPFF).
Overview A Bankers’ Acceptance (BA) is a relatively short term debt instrument that is issued by a firm with a guarantee from a bank. It is widely used in an import/export contract deals whereby, a bank guarantees payment to the exporter on behalf of the importer. International Relevance Bankers’ Acceptances are important in international trade finance where they enhance the smooth running of cross border transaction. They are common in countries with large number of export organizations like china, Japan and the U.S. Example A good example can be of a Chinese exporter exporting goods to a company in the United States of America. The exporter may need a Bankers’ Acceptance from the U. S. Company’s bank in order to ensure payment on delivery. It reduces the risk for both the exporter and the importer.
Overview A Repurchase Agreement (Repo) is the type of short-term borrowing for dealers in government securities. In this system, the dealer offers securities to the investors with an assurance to buy them back at a slightly higher cost after the agreed time duration. Repos are mainly used to raise short-term funds. International Relevance Repos are most widely used in international financial markets because of their flexibility and liquidity. They are the essential instruments for monetary policy and the financial stability of the banking systems in the countries with Central Bank, including the ECB and the Federal Reserve. They are also widely applied in currency markets to hedging foreign exchange risks. Example During the European sovereign debt crisis, the ECB used repo operations to provided liquidity to European banks facing difficulties to raise capital. This action demonstrates the key role of repos in the stability of the financial systems whenever there is a crisis.
Overview Eurodollars are dollars of the U.S. currency which are deposited in the bank in other than America, particularly in Europe. These deposits are utilized by banks to fund international loans and foreign trade transactions. Eurodollars are almost as liquid as the dollar and act as a key component in the money market. International Relevance The Euro dollar market is crucial in the global financial landscape. It facilitates cross border transactions in US dollar. It is an important short term source of funding for international banks and corporations. The knowledge of the Eurodollar system is vital for those finance students, who are studying global trade and currency markets. Example One real example that can be used to explain about Eurodollar transaction in the international business where a Japanese firm may deposit the dollars in a bank in London to pay a U.S. firm.
Our International Finance Assignment Help service is designed to meet the specific needs of students pursuing international finance courses. We provide comprehensive support to students in all topics of finance and other related fields starting from assignment help to financial analysis and assistance with quizzes, exams and case studies. Our competitive advantage lies in the quality of expertise and experience. Our team comprises of financial professionals, analysts and academicians with both theoretical knowledge as well as practical industry experience. We provide tailored solutions as per the specific instructions of the assignment and strictly adhere to the university standard of writing and presentation. What sets us apart from other generic homework help services is offering meaningful insights and fresh perspectives that enhance knowledge and understanding. Our services cover critical areas such as: • Money market instruments • Foreign exchange markets • International trade &investment theories • Exchange rate policies • Risk management in global finance • International financial institutions
Students pursuing international finance as their discipline of study must be well-versed with various money market instruments. Such instruments serves as a backbone for global financial systems and facilitate international transactions providing liquidity in the global markets. Understanding these instruments helps students not just to gain knowledge about international finance but also prepares them to tackle real life financial obstacles. As global financial transactions keeps growing with the advent of emerging multinational corporations penetrating diverse territories and sectors of the global economy, industry continues to widen its scope and reach. These instruments play a significant role in raising short term funds and maintain liquidity in the global market.
• Felix I. Lessambo, International Finance: New Players and Global Markets - A comprehensive textbook covering the role of new instruments in international finance, including a detailed analysis of money market tools. • Frederic S. Mishkin, The Economics of Money, Banking, and Financial Markets - This book provides foundational knowledge on financial markets and is an excellent resource for understanding the mechanics of money market instruments.
