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Unformatted text preview: yields as a consequence of their low risk, and (2) nongovernment issues, which have slightly higher yields than government issues with similar
maturities because of the slightly higher risk associated with them. Table 14.5
summarizes the key features and recent (May 1, 2002) yields for popular marketable securities. 6. As explained in Chapter 1, the money market results from a financial relationship between the suppliers and
demanders of short-term funds, that is, marketable securities. CHAPTER 14 TABLE 14.5 625 Working Capital and Current Assets Management Features and Recent Yields on Popular Marketable Securitiesa Security Issuer Description Initial
maturity Risk and return Yield on
2002b Government Issues
Treasury bills U.S. Treasury Issued weekly at auction; sold at a
discount; strong secondary market 91 and 182 days Lowest, virtually
risk-free 1.73% Treasury notes U.S. Treasury Stated interest rate; interest paid
semiannually; strong secondary
market 1 to 10 years Low, but slightly
higher than U.S.
Treasury bills 1.79% Federal agency
issues Agencies of federal government Not an obligation of U.S. Treasury;
strong secondary market 9 months to
30 years Slig...
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