Chapter 2 Debt Instruments Flashcards
Eurodollar Bonds
Issued in Bearer Form, Interest is paid once a year, and holders are not subject to withholding tax.
NYSE Bonds
Provides investors with cost effective, real time automatic order execution. Some unlisted debt trades on exchanges. NYSE Bonds has unlisted corporate debt of all NYSE-Listed equity issuers. Most trades OTC Yellow Sheets. Dealer quote
Treasury Inflation Protection Securities
TIPS - Treasury issue, protects against purchasing power risk. Issued with fixed interest but the principal is adjusted semiannually by an amount equal to the change in the consumer Price Index. Interest paid semi-annually is new bond price times fixed interest. Capital gains taxed annually.
Freddie Mac
Publicly held Corporation. Mortgage Backed Securities
Fannie Mae
Public Corporation that trades on exchanges. Purchases FHA and VA mortgages. Debentures, short term, discount notes, mortgage backed securities, 5,000, 25,000, 100,000, 500,000 and $1 million
Series EE Bonds
Issued at 50% face value. Designed to mature in 17 years but can he held longer (30 Years). Interest computed semi-annually at 90% average T Securities last 5 years. Can defer taxes.
Series I Bonds
purchase power protection. Accrual, interest is added monthly and paid when bond matures. Sold at face value and grow with inflation indexed interest 30 years. Fixed Rate + semiannual inflation rate. Increase in value each month and interest is compounded semiannually.
Non-Negotiable CD’s
Do not trade on secondary market, are not considered money market instruments.
Interest Volatility
From Least to Most
Prime Rate –> Call Loan Rate –> Discount Rate–> Federal Funds Rate
TRACE
FINRA approved trade reporting system for corporate bonds trading in the OTC Market. Excluded: Convertible Securities Foreign Country Debt Mortgage and Asset Backed Securities CMO's Money Markets Municipal Securities
