LIQUIDITY That invested funds are readily available to meet any contingent need?
• YIELD That invested funds earn reasonable return In addition, it is not unlikely that a specific financial instrument may be required (e.g. Treasury Bills) to fulfil some statutory requirements or other purpose. The developments in the Nigerian money market have underscored the need by every fund manager to exercise utmost caution in his investment decision by not just seeking to simply maximize returns but ensuring that his investments are safe and liquid. The only specialized institution that can best serve this purpose is a discount house. This is because, funds deposited with a discount house are: Secured – usually backed by Treasury instruments or any other securities recognized by the CBN as “eligible”. This provides a very strong “fall back” for the client and eliminates the possibilities of default. Liquid – since discount houses invest the funds in marketable securities that are readily re-discountable with the Central Bank or with a bank. The additional benefit of dealing w
