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Debt > US Government Debt > Flashcards

US Government Debt Flashcards

1
Q

Treasury Bonds: maturity and denominations

A

Maturity always 30 years; min denomination $100

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2
Q

STRIPS

A

Zero-coupon treasury bonds; No reinvestment risk

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3
Q

Treasury Receipt

A

“unofficial STRIP”, made by brokers

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4
Q

TIPS

A

Treasury Inflation Protection Securities; interest rate adjusts over life of bond

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5
Q

Treasury Notes

A

Maturities range from 1 to 10 years; min denomination of $100; Pay interest

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6
Q

Treasury Bills

A

Short-term, issued in 1, 3, 6, and 12 month maturities; zero-coupon

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7
Q

Cash Management Bill (CMB)

A

Very short term security; range from 5 day to 6 month; used as needed when Treasury is low on cash

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8
Q

MBS

A

Mortgage Backed Securities

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9
Q

FHLB

A

Federal Home Loan Bank

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10
Q

What different loans can the 3 mortgage associations buy?

A

Fannie Mae: Government & conventional
Ginnie Mae: Government only
Freddie Mac: Conventional only

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11
Q

CMO

A

Collateralized Mortgage Obligation - separate different slices of mortgage pool into tranches to offer different maturities and risks

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12
Q

PSA

A

Prepayment speed assumption - how long it is assumed to take to pay off a mortgage

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13
Q

PAC

A

Planned Amortization Class - CMO tranche with two companion classes to absorb prepayment and extension risk

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14
Q

TAC

A

Targeted Amortization Class - CMO tranche that is only protected from prepayment risk

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15
Q

CDO

A

Collateralized Debt Obligation - assembled from tranches basedon risk; implicated in stock market crash

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16
Q

How are CMO’s quoted?

A

quoted in 32nds; quoted on a “yield spread basis” which is quoting an equivalent Treasury security plus a spread

17
Q

When do government securities settle?

A

Next business day after trade

18
Q

What currency do government securities settle in?

A

Fed Funds

19
Q

Fed Funds

A

funds good at any Federal Reserve Branch member

20
Q

How is interest accrued for government securities?

A

Bonds and Notes: Actual day month/actual day year

Agency issue: 30 day month/360 year

21
Q

Tax status of government securities

A

Government and agency issues: Federal tax, exempt from state

Privatized i.e. mortgage issues: Federal and state taxes

22
Q

GNMA Pass Through Certificates: Quoted on % of par or yield basis?

A

% of par

23
Q

Private CMO Credit Rating

A

Based on structure, issuer, and collateral

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