Which would you rather have?
Which would you pay more for (everything else the same)?
A bond that has a clause
that allows the issuer
to call it in if and when
he/she decides it is to
their advantage to do so
A bond that has a clause
What is a Treasury bond?
1) interest stream
2) return of principal
3) and assuming that bond is marketable, which
most/all are, right to sell
Interest called coupon rate or sometimes called
the face rate. Welded to bonddoes not change
Treasury Bill Yields
Treasury bill yields are stated in either of two ways: the yield on a
discount basis (sometimes referred to as the discount rate *) is the
most commonly seen, but the actual return to investors or the
investment yield is the most impo
Present Value Concepts
What is present value?
It is todays value of a payment (or payments) to
be received in the future. It is the value today of
a future payment or series of payments,
discounted at the appropriate discount rate.
What determines this pr
Monetary Policy Today
At the conclusion of each FOMC meeting, the Fed releases a policy statement. A
review of those releases over recent years reveals that the statements coming out of
those (scheduled1) meetings invariably read something like: The Feder
The Dallas Morning News
Systemic risk is on the bubble
07:45 AM CST on Monday, March 27, 2006
The mortgage market remains a mystery to virtually every American.
For starters, the sheer size is inconceivable; its hard to
About interest rate determination
First, it is important to recognize that an interest rate is a price.
Specifically, the rate of interest* is the price of loanable funds.*
Second, remember that in a market economy, prices are
determined by the forces of
Zero Coupons and STRIPS
Zero-coupon bonds or zeros result from the separation of coupons from the body
of a security.
Zeros sell at discounts from face value.
The difference between the purchase price of the zero and its face value when
redeemed is the in
Understanding U.S. Government Securities Quotes
Because the market for U.S. Government securities is both global and highly
competitive, prices tend to be similar throughout the world.
Quotes for Treasury securities show the security's interest rate when
year or less initial maturity
most mature in less than 120 days
very large denominations
most transactions in excess of $1 million
Low default risk
Normally good liquidityactive secondary market
Just a few thought questions
For each of the following, what does it
imply relative to market efficiency?
1. A broker (whom youve never met before) calls
you with a hot tip on a stock that cant do
anything but go up.
2. A friend, who is
T-bill rates mixed in auction
Washington - Interest rates on short-term
Treasury securities were mixed in Mondays
The Treasury Department sold $8 billion
in three-month bills at a discount rate of
4.45 percent, up from 4.40 percent last
9. Question :
_ lies within the operations function of the
organization and involves determining if process choice decisions
and capabilities are consistent with infrastructure decisions and
Decision Loop 1
Decision Loop 2