2.11 U.S Treasury Securities

Question 1

A Primary Dealer

Answer 1

A bank or broker dealer that buys treasury securities at auction from the US treasury and resells them to investors

They are known as the “MARKET MAKER”

Question 2

Treasury bill (T-Bill)

Answer 2

Treasury security that matures in one year or less

Question 3

Treasury note

Answer 3

Coupon Bonds having a maturity ranging from 2 to 10 years

Question 4

Treasury bond

Answer 4

Coupon securities having maturities from 10 to 30 years

Question 5

STRIPS

separate trading of registered interest and principal of securities

Answer 5

Long term zero coupon Bonds consisting of US treasury securities

Question 6

TIPS

Treasury inflation protected Securities

Answer 6

Inflation adjusted Securities issued by the US treasury

The principle is adjusted according to the consumer price index (CPI)

At maturity the investor receives the inflation adjusted principal or the original principal, which ever is greater