Money market instruments issued by the us treasury

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15) Money market instruments issued by the U.S. Treasury are called A) Treasury bills. B) Treasury notes. C) Treasury bonds. D) Treasury strips. Answer: A 16) The Treasury auctions 91-day and 182-day Treasury bills once a week. It auctions 52-week bills 17) Which of the following statements are true of Treasury bills? 18) Suppose that you purchase a 91-day Treasury bill for $9,850 that is worth $10,000 when it matures. The security’s annualized yield if held to maturity is about 112
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19) If your competitive bid for a Treasury bill is successful, then A) you will certainly pay less than if you had submitted a noncompetitive bid. B) you will probably pay more than if you had submitted a noncompetitive bid. C) you will pay the average of prices offered in other successful competitive bids. D) you will pay the same as other successful competitive bidders. Answer: B 20) If your noncompetitive bid for a Treasury bill is successful, then 21) Federal funds 22) Federal funds are 23) The Fed can influence the federal funds interest rate by adjusting the level of reserves available to banks in the system. The Fed can A) lower the federal funds interest rate by adding reserves. B) raise the federal funds interest rate by removing reserves. C) remove reserves by selling securities. D) do all of the above. E) do only (A) and (B) of the above. Answer: D 113
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