subject: Merits And Demerits Of Cash Market [print this page] Body:- Body:-
Cash market is the market where goods and money are exchange between the seller and the buyer. It is the market where all the trading is to be done in the form of money. This is also known as the spot market or money market. In the cash market, the price for a specific commodity is usually less than its price in the futures market. Generally in cash marketing selling and buying has to be done for a short period of time. Cash marketing is considered larger than stock market, but this does not mean it is more important.
Cash market in India:-
The India money market is for short-term funds with maturity ranging from one day to one year.
The Indian money market consists of different sub-markets, each dealing in a particular type of short-term credit. The money market fulfills the borrowing and investment requirements of providers and users of short-term fund. The call money market deals in short term finance repayable on demand, with a maturity period varying from one day to 15 days. The rate in this market is the "call money rate." The rate is determined by the demand and supply of funds.
How to increase your money:-
Cash market provides a very good offer to increase your money. While investing in cash market you have to study the market and investing company position. It is very tough task for the beginner but as time gone and their market study and knowledge increase they got the idea how to invest in market. As we know in cash market we have to trade for a short time of period this help us to make a handsome profit. But it doesn"t assure the successful rate. There is also a risk in cash market because the market position in not fixed and it is varying time to time. Money market provides a lower risk as compare to other market. A money market fund is essentially a mutual fund that invests in low-risk securities.The main components of a money market fund are the quality of its investments and its liquidity.
Merits
i. The money can be taken back when it is needed.
ii. In cash market we can earn interest by quick lending of idle cash.
iii. We can promote stock exchange transactions.
iv. The main operators in this market are the 'Acceptance houses' and the commercial banks.
Demerits
i. Cash market promotes the operations of discount houses.
ii. Making the bills negotiable
Cash marketing is considered larger than stock market, but this does not mean it is more important. For reduce the loss traders have lot of knowledge about the stock market and other way is to take experts or advisers stock tips for the trading.
