Fin3005

1. What argon the three characteristics common to money mart securities?
a. capital market instruments be generally sold in pear-shaped denominations. Most money market participants want or strike to borrow large amounts of cash, so that transactions costs are low relative to the affair paid.
b.Money market instruments stand low default risk. The risk of late or equivocation of principal and/or interest is generally small.
c.Money market securities must have an original maturity of one social class or less. Given that price movements resulting from interest rate changes are smaller for short-term securities, the short-term maturity of money market instruments helps lower the risk that interest rate changes will significantly affect the securitys market value and price.
2. What is the fight between a synthesis yield and a stick around equivalent yield? Which yield is used for Treasury shoot down quotes?
a.The bond equivalent yield is the rate used to organize the present value of and investment, and a usher out yield is the interpret on securities results from the obtain of the security at a give the axe from its establishment value and the receipt of face value at maturity.
b.They use bond equivalent yields.
3. Why can discount yields non generally be compared to yields on other (nondiscount) securities?
a.



The discount yield uses the terminal price, or the securitys face value, as the base price in calculating an annualized interest rate. The bond equivalent yields are based on the purchase price of a security. Because adjusting for both the base price and geezerhood in the twelvemonth difference, requires converting a discount yield into a bond equivalent yield.
4. Whats is the difference between a single-payment yield and a bond equivalent yield?
a. case-by-case payment yield only pay out 360-day year and a bond equivalent yield may not pay out yearly.
5. Describe the T-bill auction process.
a.Treasury bills (as hearty as notes and bonds) are issued through a competitive instruction process at auctions. If...If you want to get a dear essay, order it on our website: Orderessay



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