markets, and financial market culture will differ. For instance, the prevailing financial culture in the United States and United Kingdom is based on a second- ary market in tradable financial assets, so we have a developed and liq- uid bond and equity market in these economies. While such an arrangement also exists in virtually all other countries, the culture in certain economies such as Japan and (to a lesser extent) Germany is based more on banking relationships, with banks providing a large pro- portion of corporate finance. The differences across countries are not touched upon in this book; rather, it is the similarities in the type of instruments used that is highlighted. In developed economies, the money market is large and liquid. Exhibit 1.1 illustrates the market growth in the United States during the 1990s. Exhibit 1.2 illustrates the breakdown of the United Kingdom money market by different types of instrument, each of which we cover indetailinthisbook.       OVERVIEW OF THE BOOK   In Chapter 2 we cover money market calculations. The intent of this chapter is to introduce some of the fundamental money market calcula- tions and conventions that will be used throughout this book, including day count conventions, as well as the basic formulae for price and yield. It is essential to understand these calculations since some market instru- ments are interest bearing while others are discount instruments. More- over, some instruments calculate interest based on a 360-day year and some money market securities use a 365-day year.   EXHIBIT1.1 US Money Market Volumes, $ Billion at Year-End   Instrument 1990 1995 1999   Treasury bills 527 748 723 Federal agency securities 435 845 1,284 Commercial paper 561 675 1,213 Bankers acceptances 55 29 21 Fed funds borrowers and repo 409 569 762 Eurodollar borrowings 37 94 167 CDs(minsize $100,000) 432 345 634   Source: Federal Reserve Bulletin, 2000, 2001