Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
21 Cards in this Set
- Front
- Back
|
Series EE Bonds
|
A non-marketable, interest-bearing U.S. government savings bond that is guaranteed to at least double in value over the initial term of the bond, typically 20 years. Most Series EE bonds have a total interest-paying life that extends beyond the original maturity date, up to 30 years from issuance.
|
|
|
Treasury Bills
|
A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations of $1,000 up to a maximum purchase of $5 million and commonly have maturities of one month (four weeks), three months (13 weeks) or six months (26 weeks).
T-bills are issued through a competitive bidding process at a discount from par, which means that rather than paying fixed interest payments like conventional bonds, the appreciation of the bond provides the return to the holder. |
|
|
Discount Yield
|
i = (Par Value - Price)/ par value x 360/Number of days to maturity
|
|
|
Annualized Yield
|
i = (par value - Price)/price x 365/number of days to maturity
|
|
|
Treasury Notes
|
A marketable U.S. government debt security with a fixed interest rate and a maturity between one and 10 years. Treasury notes can be bought either directly from the U.S. government or through a bank.
When buying Treasury notes from the government, you can either put in a competitive or noncompetitive bid. With a competitive bid, you specify the yield you want; however, this does not mean that your bid will be approved. With a noncompetitive bid, you accept whatever yield is determined at auction. |
|
|
Treasury Bonds
|
A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest payments semi-annually and the income that holders receive is only taxed at the federal level.
|
|
|
STRIPS
|
An acronym for 'separate trading of registered interest and principal securities'. Treasury STRIPS are fixed-income securities sold at a significant discount to face value and offer no interest payments because they mature at par.
|
|
|
Inflation - indexed secirities
|
A security that guarantees a return higher than the rate of inflation if it is held to maturity.
|
|
|
Federal Agency Bonds
|
Debt issued by an agency of the federal government
|
|
|
Moral Backing
|
Nonobligatory support for a debt issue
|
|
|
Ginnie Mae
|
A U.S. government corporation within the U.S. Department of Housing and Urban Development (HUD). Ginnie May aims to:
1. Ensure liquidity for government-insured mortgages, including those insured by the Federal Housing Administration (FHA), the Veterans Administration (VA) and the Rural Housing Administration (RHA). 2. Bring investors' capital into the market for these types of loans, so that the issuers have the means to issue more. Most of the mortgages securitized as Ginnie Mae mortgage-backed securities (MBSs) are those guaranteed by FHA, which are typically mortgages for first-time home buyers and low-income borrowers. |
|
|
Basis Point
|
0.01 percent
|
|
|
Mortgage-Backed Security - MBS
|
A type of asset-backed security that is secured by a mortgage or collection of mortgages. These securities must also be grouped in one of the top two ratings as determined by a accredited credit rating agency, and usually pay periodic payments that are similar to coupon payments. Furthermore, the mortgage must have originated from a regulated and authorized financial institution.
Also known as a "mortgage-related security" or a "mortgage pass through". |
|
|
Collateralized Mortgage Obligation - CMO
|
type of mortgage-backed security that creates separate pools of pass-through rates for different classes of bondholders with varying maturities, called tranches. The repayments from the pool of pass-through securities are used to retire the bonds in the order specified by the bonds' prospectus.
|
|
|
Tranche
|
subdivsion of a bond issue
|
|
|
Municipal Bond
|
A debt security issued by a state, municipality or county to finance its capital expenditures. Municipal bonds are exempt from federal taxes and from most state and local taxes, especially if you live in the state in which the bond is issued.
|
|
|
equation to compare a tax free bond to a non exempt bond
|
i(1 - t) = m
i interest on corperate bond t tax bracket m interest rate on muni bond |
|
|
General Obligation Bond - GO
|
A municipal bond backed by the credit and "taxing power" of the issuing jurisdiction rather than the revenue from a given project.
|
|
|
Revenue Bond
|
A municipal bond supported by the revenue from a specific project, such as a toll bridge, highway, or local stadium.
|
|
|
Anticipation Note
|
A short-term obligation that is issued for temporary financing needs by a municipality. The principal payoff may be covered by a future longer-term bond issue, taxes or other form of revenue. These notes normally have maturities of one year or less and interest is payable at maturity rather than semi-annually
|
|
|
Brady Bonds
|
Bonds that are issued by the governments of developing countries. Brady bonds are some of the most liquid emerging market securities. They are named after former U.S. Treasury Secretary Nicholas Brady, who sponsored the effort to restructure emerging market debt instruments.
|
