Treasury securities
- treasury bills
- treasury notes
- treasury bonds
- offered by auction
- competitive bidders, broker dealers, large banks, money centers-$1 million or more-bid within interest rate Fed wants
- noncompetitive bidders, buy $1000-$1,000,000, will always get bonds
- all bidders get T-bills at same yield
- T-bills, T-notes, T-bonds-winning bids get securities at one set price
- T-bill auction-Monday and Tuesday
- payment due Thursday in cash, banks- as federal funds, rollover-maturing Treasry security
- individuals roll over maturing T-bills or deposit a check before auction date
- banks, large institutions set up federal funds account with Fed and pay on Thu payment due
- notes-auction 2nd and 4th Wed, payment due on 15th or last day of mo
- no prospectus, no official statement required
- exempt from Securities Act of 1933
- negotiated underwriting
- issued at price close to par
Noncompetitive bidders for U.S. government T-bills receive which of the following yields at auction?
- the highest yield
- competitive bidders determine yield
- noncompetitive bidders get T-bills first at highest yield
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