Tag: business organisation

The money deposit made by the buyer to the seller of real estate during negotiation stage is known as Earnest Money Deposit. An earnest money deposit can be referred as a specific form of security deposit made in some major transaction. It is done by the applicant to show his willingness to complete the transaction.

A commercial bill is a short-term, negotiable, self-liquidating instrument which is used to finance the credit sales of firms. Commercial bills are known as trade bills or accommodation bills. These are common instruments used in credit purchase and sale. These have short term maturity period generally 90 days and can be discounted with bank even before the maturity period.

Treasury bill are issued at a price which is lower than their face value and repaid at par. A treasury bill is basically an instrument of short-term borrowing by the Government of India maturing in less than one year.  Treasury bills enable government to get short term borrowings as these bills are sold to banks and general public. Maturity of Treasury bills varies from 14 to 364 days.

Treasury bills are also known as Zero Coupon Bonds that are available for a minimum of and in multiples thereof. A treasury bill is basically an instrument of short-term borrowing by the Government of India maturing in less than one year.  Treasury bills enable government to get short term borrowings as these bills are sold to banks and general public. Maturity of Treasury bills varies from 14 to 364 days.

Money market instruments are short-term debt securities with high liquidity and low risk, such as Treasury Bills and Commercial Paper. Warrants are long-term options that give the holder the right to buy stock, making them capital market instruments, not money market instruments.

The money market is specifically designed for short-term borrowing and lending of funds, typically with maturities of one year or less. Capital, stock, and commodity markets are generally associated with longer-term investments or physical assets.

The call/notice money market is a segment of the money market where banks and primary dealers borrow and lend funds for very short periods. While regulations have evolved, traditionally and in most standard academic contexts, this market is restricted to commercial banks and primary dealers.

The money market yield will be lower than the yield on stocks and bonds because of the low risk.

Working capital financing is done by various modes such as trade credit, cash and discount of bills, bank guarantee, letter of credit, factoring, commercial paper, working capital financing extensively used by all small and big businesses.