There are two types of money market instruments

1. government T-bills
   • terms of 91, 182 or 364 days
   • large denominations
   • issued at a discount (below face value) and mature at face value
2. corporate (issued as a negotiated offering to banks or investment dealers to resell at a markup)
   1. commercial paper
      • unsecured (e.g., GM commercial paper)
   2. Acceptance (finance paper)
      • secured debt issued by a non-deposit taking institution (e.g., GMAC)
   3. Banker's Acceptance (BA)
      • short-term corporate debt instrument with bank repayment guarantee
      • e.g., TD Bank BA = GM paper + TD repayment guarantee

Formulas

Annualized Yield = (100-Price)/100 x 365/(# of days) x 100

Current Yield = (Annual Interest)/(Purchase Price) x 100

• ignores capital gains and losses

Annual Interest = Face Value x Coupon Rate