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Unformatted text preview: • Bid Price= Par Value- Bid yield Discount in Dollars • Bid Yield Discount in Dollars= Par Value x Discount Rate (as Decimal) x Remaining Days to Maturity. • Dealers Spread= Dealer’s Ask Price- Dealer’s Bid Price • T-bills are issued by the government to cover deficits and to refinance maturing government debt. • Unlike T-Bills; T-Notes and T-Bonds are coupon instruments. • Credit Enhancements lower costs to issuers and default risk to investors. • Capital Markets can be either debt or equity; all money markets instruments are debt securities. • Tax exempt bonds the before tax return equals the after tax return. • When Interest rates are low people refinance their mortgages....
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- Spring '08