Questions 1 to 10 are false statements. Please rewrite each statement so that it is true. This can be as simple as a word change or more complex. How are reported interest rates for federal funds and repurchase agreements reported? Repurchase agreements have no risk of default, no liquidity risk and are guaranteed by guarantees, so their yield is the lowest of all money market securities. The Federal Reserve has entered into a buyback agreement with the Bank of Transylvania in which the Fed buys government bonds for $9,967,500 from the bank, which promises to buy back the securities 21 days later at a price of $10,000,000. What will be the return on the pension equivalent of the bond? Converting the discounted yield of a T-bond bond into an equivalent bond yield results in a lower yield. RKO, Inc. Commercial Paper has 75 days to mature at $500,000. The current market price is $492,500.
Calculate the discounted yield and equivalent bond yield of this commercial paper. Questions 11 to 14 are problems to be solved. Please indicate your job if you would like partial credit if the final answer is incorrect. That is, if you only write a one-number response, it`s either good or wrong. Some money market securities have active markets. How are most money market trading days usually organized? There is a formula that you can write, but also try to explain the procedure in words. What are the typical or common maturities of the following money market securities? Most money market securities are initially sold to individual investors. A T-bond with a face value of $1,000,000 and 225 days from maturity currently has a discount yield of 4.25%. What is the market price of this T-Bill and what is its equivalent bond rate? Money market collateral prices and yields are more sensitive to changes in interest rates than long-term corporate bonds. If treasury bills are initially offered or auctioned (primary market), what are the two maturities used? When an IF uses the federal funds market, it trades directly with the Federal Reserve via Fedwire.
Recently, the Federal Reserve used commercial paper to deal with a temporary liquidity crisis that developed when corporate tax payments were due and a treasury bill offering was arranged. The majority of money market securities are low-risk investments designed to attract individual investors with excess liquidity. .