BUSFIN 4223 - Course Introduction
Fixed Income Security - ANS-Investments that have specific and fixed interest rates or dividend
rates, such as bonds.
Bond - ANS-A debt instrument that relies on the issuer/ debtor/ borrower to repay the lender/
investor the amount borrowed plus interest over a specific time period.
US Gov't Bond Variations on Fixed Income - ANS-Issuers
Coupons
Option-like features
Collateral
Option-like features - ANS-Option to call, Conversion, Option to put
Treasury Securities - ANS-Used to finance gov't spending
Very liquid - little price impact when buying or selling
Perceived to be safest
Default-free but not risk-free
Types of Treasury Securities - ANS-Treasury Bills - maturity of a year or less
Treasury Notes - maturity of 1-10 years
Treasury Bonds - maturity of 10+ years
Treasury Inflation-Protected Securities (TIPS) - interest paid tied to inflation rate
US Savings Bonds
Treasury Auctions - ANS-US Gov't auctions new treasuries
Cash Management Bill (CMB) - ANS-Treasury bill not offered according to a schedule, but
offered as the gov'ts borrowing needs warrant
Reopening - ANS-Issues additional amounts of previously issued security
Interest Rate - ANS-Coupon rate
Noncompetitive Bidding - ANS-Typically individual investors/non-experts
- agree to high terms at auction
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