Government owned agencies are back by what, pertaining to debt?
What is the full faith and credit of the U.S. Government
100
what is a repo?
repurchase agreement
100
Who are the most important class of buyers and sellers of money market instruments?
Commercial Banks
200
Name 2 of the key features of money market instruments?
What is low default risk, low price risk (short term), high liquidity, large denominations (low transaction costs)
200
What is the maximum percentage of T-Bills that are offered in the auction competitively?
What is the total of the bids cannot exceed 35 percent
200
Give one reason why the Fed Funds rate is of particular interest
1. Measures return on the most liquid of all financial assets
2. closely related to monetary policy
3. Measures the availability of excess reserves
200
What is a haircut?
The percentage that is taken off when the money is loaned (i.e 1million loan with a 3% haircut means the loaned amount is 970,000)
200
What is the term for a pool of money from investors that are used to participate in the money market?
Money Markets Mutual Funds
300
What is the economic role of money markets?
What is to bridge the gap between cash receipts and case expenditures (solve liquidity problems)
300
What is the main difference between noncompetitive bids and competitive bids? (what can one do that the other cannot)
What is competitive bids set the price, noncompetitive bids have to accept the uniform price
300
Name 3 of the U.S. Federal Agencies authorized to issue debt?
1. Farm Credit Bank System (FCS)
2. Federal Financing Bank (FFB)
3. Federal Home Loan Bank (FHLB)
4. Federal Home Loan Mortgage Corporation (Freddie Mac)
5. Federal National Mortgage Association (Fannie Mae)
6. Export-Import Bank
7. Federal Housing Administration (FHA)
8. Government National Mortgage Association(Ginnie Mae)
9. Small Business Administration
10. Veterans Administration
300
What is commercial paper?
Commercial paper is short term note from large, highly rated companies that are stable, used for working capital needs
300
to make the marketWhat is the primary function of the government securities dealers?
To make the market
400
How are almost all securities traded today?
How are almost all securities traded today?Electronically (from safekeeping facilities, rarely are they physically shipped
400
This equation represents the formula to derive what?
Yd=(Pf-P0/Pf) X (360/n) X 100%
What is Discount Yield
400
What is the difference between being Government owned, as opposed to being Government sponsored?
What is government sponsored debt is not back by the government, although some backing is implied
400
Why is it cheaper to use a dealer to issue commercial paper normally?
The dealers are well in tune with the market and guarantee the sale of all paper, without making the company hold a staff to sell the paper
400
What action did the U.S. Government take when Fannie Mae and Freddie Mac failed?
The Government placed them in concervatorship, guaranteeing their debt
500
asset-backed commercial paper (ABCP)What form of commercial paper took a massive blow between the years 2007-2010 because of sub-prime housing being involved
asset-backed commercial paper (ABCP)
500
What does this equation represent?
P0=Pf/ 1+(Ybe X (n/365))
What is the bond equivalent yield equation to find the price
500
What event and change in policy caused the bank reserves of the FED to soar in 2009
What is Housing market crash, and interest being paid on reserves
500
The purpose is to promote business by using the bank as the creditworthy institution, insuring the payment to the seller
what is the purpose of banker's acceptance?
500
What actions are taken by commercial banks during times of recession with excess reserves?
Banks typically purchase treasury and government securities