The interest rate obtained from investing in assets with high liquidity and short maturities, such as negotiable certificates of deposit, U.S. Treasury bills, and municipal notes, is known as the money market yield.
What Is the Money Market Yield?
- The money market yield is derived by multiplying the holding period yield by a 360-day bank year divided by the number of days till maturity. It can also be calculated using a bank discount yield.
- Bond equivalent yield and CD-equivalent yield are closely related to the money market yield (BEY).
- Investors anticipate receiving a return on their investment from money market instruments, or the money market yield.
- The money market entails the buying and selling of substantial quantities of very short-term debt instruments, including overnight reserves or commercial paper.
- A person can make an investment in the money market by buying a money market mutual fund, purchasing a Treasury bill, or by opening a money market account at a bank.
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