FIN 310 Chapter Notes - Chapter 3: Unsecured Debt, Weighted Arithmetic Mean, Interbank
17 Oct 2016
School
Department
Course
Professor
Document Summary
Money markets include short-term, highly liquid, and relatively low-risk debt intruments. Treasury bills short-term government securities issued at discount from face value and returning the face amount at maturity. Bank-discount method (cid:373)ea(cid:374) that the (cid:271)ill"s dis(cid:272)ou(cid:374)t fro(cid:373) its (cid:373)aturit(cid:455), or face, value is (cid:862)a(cid:374)(cid:374)ualized(cid:863) (cid:271)ased o(cid:374) a 360-day year and then reported as percentage of face value. It assumes that the year has only 360. It computes the yield as a fraction of face value rather than of the price the investor paid to acquire the bill. Certificate of deposits (cd) time deposit with a bank. Commercial paper short-term unsecured debt issued by large corporations. Usually backed by a line of credit. Ba(cid:374)ker"s a(cid:272)(cid:272)epta(cid:374)(cid:272)e an order to a bank by customer to pay a sum of money at a future date. Eurodollars dollar denominated deposits at foreign banks or foreign branches of american banks.
