MONEY MARKET

The money market is the global financial market for short-term borrowing and lending. It provides short-term liquid funding for the global financial system. The money market is a sector of the capital market where short-term obligations such as Treasury bills, commercial paper and bankers' acceptances are bought and sold.

A money market consists of financial institutions and dealers in money or credit who wish to either borrow or lend. Participants borrow and lend for short periods of time, typically up to thirteen months. Money market trades in short term financial instrument commonly called "paper". This contrasts with the capital market for longer-term funding, which is supplied by bonds and equity.

Borrowers

The core money market consists of banks borrowing and lending to each other, using commercial paper, Repurchase agreements and similar instruments. These instruments are often benchmarked to LIBOR.

Finance companies, such as GMAC typically fund themselves by issuing large amounts of asset backed commercial paper which is secured by the pledge of eligible assets into an asset backed commercial paper conduit. Examples of eligible assets include auto loans, credit card receivables, residential/commercial mortgage loans, mortgage backed securities and similar financial assets. Certain large corporations with strong credit ratings, notably General Electric, issue commercial paper on their own credit. Other large corporations arrange for banks to issue commercial paper on their behalf via commercial paper lines.

Federal, State and local governments all issue paper to meet funding needs. States & local governments issue municipal paper, while the US Treasury issues Treasury bills to fund the US Public Debt.

• Trading companies often purchase bankers acceptances to be tendered for payment to overseas suppliers.
• Retail and Institutional Money Market Funds
• Banks
• Central Banks
• Cash management programs
• Arbitrage Asset backed commercial paper conduits, which seek to buy higher yielding paper, while themselves selling cheaper paper.

Trading takes place between banks in the "money centers" (London, New York, Tokyo and Greenwich)

from
http://en.wikipedia.org/wiki/Money_market

Secured loans

A secured loan is a loan in which the borrower pledges some asset (e.g. a car or property) as collateral for the loan. The loan is thus secured against the collateral — in the event that the borrower defaults, the lender takes possession of the asset used as collateral and may sell it to regain the amount originally lent to the borrower.

As the loan is secured, the lender is relieved of most of the financial risks involved; he may thus offer attractive terms for the borrower on interest rates and repayment period.

One attractive type of secured loan that is normally only available at a bank or credit union is the savings secured loan. In this type of loan, the borrower must have a savings account with the lender. A portion of the money in this account is used as collateral to secure a loan equal to the amount pledged. This money is then frozen in the account but continues to earn interest. As the loan is repaid the secured portion of the savings account is freed. This has advantages for both the lender and the borrower. If the borrower defaults on the loan the collateral is already in the lender's possession so it is a very low risk. As a result, the lender usually offers a much lower interest rate. The disadvantage of this type of loan is that it is limited by the available fund in the savings account.

A mortgage loan is a secured loan in which the collateral is property, such as a home.

A nonrecourse loan is a secured loan where the collateral is the only security or claim the lender has against the borrower, and the lender has no further recourse against the borrower for any deficiency remaining after foreclosure against the property.

A foreclosure is legal process in which mortgaged property is sold to pay the loan of the defaulting borrower.

A repossession is a process in which property, such as a car, is taken back by the creditor when the borrower does not make payments due on the property. Depending on the jurisdiction, it may or may not require a court order

from:
http://en.wikipedia.org/wiki/Secured_loan