Money market yield refers to the yield of security that is expressed under the money market day count convention. The money market yield is generally expressed in one hundredth of a percentage point or in basis points.
A money market is a global financial market that handles the short term borrowings and lending. The money market generally provides the short-term liquid funding to the global financial system. The short-term obligations like commercial papers, treasury bills and banker’s acceptance are bought and sold in the money markets. The participants of the money market borrow and lend generally for thirteen months.
The market yield is a percentage measuring the cash returns of a security to owner and gives a clear perception of the fiscal market. Generally, the market yield does not include the price variations. When concerning bonds, the market yield of a bond is inversely proportional to its current price and naturally, if the price of the bond falls, the market yield of the bond goes up. The dividend yield on the other hand is the total yearly payments divided by the principal value. For common shares, the dividend yield is the total amount of dollars paid in a single year divided by the spot price of the shares.
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money market yield refers to the production of a certain amount after a short period of time. The money market funds release their yields on a periodic manner such as effective 7-day yield, current 7-day yield and current 30-day yield. The 7-day current yield reflects the fund’s current earnings more clearly than the released total return quotation. The money market yield is a bond quotation convention that is based on the semi-annual coupons and 360-day year. The bond yield is calculated on the basis of an annual percentage rate method and it differs from the annual effective yield of the bond.
The yield curve typically represents the relation between the interest rate and the time of maturity and the curve moves on a daily basis. The yield curves are usually upward sloping and generally are in an asymptotic nature.