CH02 - 2-1Chapter 2Bonds2-2The United States TreasuryThe...

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Unformatted text preview: 2-1Chapter 2Bonds2-2The United States TreasuryThe U.S. Treasury performs primarily the following functions.Collects taxes.Pays the bills of the government.There is a deficit if taxes are less than payments. There is a surplus if taxes are greater than payments.2-3Several Things Noteworthy about U.S. Treasury DebtThe total debt is huge, in the vicinity of 10 trillion dollars.The Treasury has a very large number of debt issues.Individual debt issues are extremely large in size and therefore highly liquid. Liquid securities can be bought and sold rapidly without affecting the price.2-4The Treasury Must Raise Very Large Amounts of Money.One reason for the large dollar volume of securities that must be sold is the need to replace maturing securities by new issues.The Treasury must finance deficits.2-5Marketable Debt vs. NonmarketableBasically the Treasury sells two types of debt. Marketable debt is sold to the public and can be resold to other buyers. This is approximately half of the debt.Nonmarketable debt cannot be resold....
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This note was uploaded on 06/07/2011 for the course FIN 4243 taught by Professor Dudley during the Spring '08 term at University of Florida.

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CH02 - 2-1Chapter 2Bonds2-2The United States TreasuryThe...

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