BFC2340 Study Guide - Final Guide: United States Treasury Security, Royal Numismatic Society, Primary Market
8 Aug 2018
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Week 5 - treasury & federal agency securities and international bonds. Us treasury securities are very important because of their volume (in terms of $) and their liquidity. The dealer spread b/w bid and ask price is considerably narrower than in other sectors of the bond market. Therefore, investors are not subject to call risk. Marketable treasury securities are either fixed-principal securities or inflation-indexed securities. Rather the price is discounted from their maturity value. Pays quarterly coupons that depend on the benchmark. Coupon securities that adjust its payments for inflation. Inflation-adjusted principal = the principal that the coupons and maturity value will be based upon is adjusted semi-annually. Treasury securities issued in the primary market through sealed-bid auctions. Two types of bids that may be submitted by a bidder: The entity that is willing to purchase the auctioned security at the yield that is determined by the auction process. The amount sought after must not exceed million.
