Explain the mechanics of issuing Treasury bills, indicating how the price of a new issue is determined.
Answer to relevant QuestionsDescribe the dealer system for marketable U.S. government obligations. What is the term structure of interest rates and how is it expressed? What is meant by the speculative type of inflation? A thirty-year U.S. Treasury bond has a 4.0 percent interest rate. In contrast, a ten-year Treasury bond has an interest rate of 3.7 percent. If inflation is expected to average 1.5 percentage points over both the next ten ...A corporate bond has a nominal interest rate of 12 percent. This bond is not very liquid and consequently requires a 2 percent liquidity premium. The bond is of low quality and thus has a default risk premium of 2.5 percent. ...
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