Bubba is buying a treasury bill. The discount he receives results in Bubba’s determination of:
Answer(s): C
rate of return. Because T-bills pay no interest, Bubba’s rate of return is the discount as a percentage of the face value he receives at maturity.
A treasury obligation having no fixed rate of interest with a thirty-day maturity due April 22 is most likely a:
Answer(s): B
tax anticipation bill. These obligations pay no interest and their maturity comes after corporate tax payment dates. They are accepted for redemption at face value prior to maturity on corporate tax payment dates to encourage purchase by corporations.
Which of the following has the greatest risk?
Answer(s): A
a guaranteed corporate bond. All of the other securities are obligations of the US government, which is considered to have minimal or no risk.
Bubba wants to buy a US treasury bond with a bid of 97.28 and an asking of 98.2. How were these prices established?
by competitive biding. The quoted prices for treasury bonds-as with all negotiable securities-is determined in the market by competitive biding.
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