Governemnt Securities Flashcards
Treasury Notes/ T notes
Sold with a. Fixed interest rate coupon Pay interest semi annually Miniumun denomination of $1000 Maturities of 2-10 years Never callable
Treasury bills:
Short term maturities( 1,3,6,12 month)
Sold at discount
Do not pay interest no coupon
Miniumun denominations $100
Treasury Bonds/ T bonds
Soled fixed interest rate, coupon rate Pay interest semi annually Minimum denomination of $1000 Mature 10-30years Can be issued as callable LONG BOND
Treasury bills are direct_________debt obligations of federal government and offer investors extremely _______investment of the __________quality
Short term debt, liquid, highest
T BIlls can be redeemed at?
Only US govt security always sold at?
T bills do not have what kinds of risk?
Maturity, sold at a discount, reinvestment
Tbills are _______from what kinds of income taxes?
Exempt from state and local BUT SUBJECT TO FED INCOME TAX
TBills Taxation as_________to investors and NOT as a __________.
Interest income, capital gain.
TBills are fully marketable and can be sold ___________, but are ____________until maturity. They also are _________ _________ prior to maturity.
Secondary market, not redeemable, not callable
Matures of a TBill are:
1month. 4 weeks
3 month, or 13 weeks
6 month or 26 weeks
12 month or 52 weeks
For TBills, the 4 week 13 week and 26 week bills are auctioned when and settle when?
Auctioned every Monday, and settle Thursday T+3
A 52 week TBill auction is?
Monthly
3 and 6 month TBills are sold at_________auctions conducted by who?
Weekly, FRB
Non-competitive orders from the public are always___________.
Filled first. Average price also called the competitive tender price
Regular way settlement for TBills sold at auction is______. Regular way settlement for TBills sold in secondary market is _______.
T+3, T+1
Quotations for TBills are quotes on a _________. When looking at quotes the Bid is________than the Ask, because it is quoted at the amount of the discount.
Discounted yield basis, higher
Basis points on $1,000,000 TBills are equal to the following
- _______on a 12 month
- _______on a 180 day
- _______on a 3 month
$100, 50, 25
TBills Are held in what kind of form
Book entry form, like a receipt
TBills help to finance the what of the federal budget
Deficits
Regular way settlement for Tnotes and Tbonds are
Regular way settlement T+1
Treasury Inflation-Protected Securities (TIPs) are
Treasury notes and bonds where the interest and redemption payments are indexed to the current inflation rate base on the Consumer Price Index
The final payment of the TIP cannot be________than what the investor originally paid
Less
If a dealer sells treasury securities with an agreement to repurchase them a short time later, the agreement is own as
Repurchase agreement, repos have little or no: price risk, credit risk, liquidity risk. Interest is comparable to the federal fund rates
Primary dealers are
Certain domestic broker dealers foreign broker dealers doing business in the US. Commercial banks and government securities trust accounts authorized to buy and sell government securities directly with the FED
In order to become a primary dealer in the US government securities the firm must be______as such by_______
Recognized, Federal reserves open market committee (FOMC)
