The following are trading examples of treasury notes, bonds , strips and other US Government based securities trades.
A customer places an order to buy ten 4% US Treasury Notes on Monday August 3rd for regular way settlement. This trade will settle on:
A) Monday August 3rd
B) Tuesday August 4th
C) Wednesday August 5th
D) Thursday August 6th
B: All US Government Securities, including Treasury Notes, settle on the next business day. This trade will settle on Tuesday August 4th.
Treasury Notes pay interest:
A) Monthly
B) Semi annually
C) Quarterly
D) At maturity
B: Treasury notes and treasury bonds pay interest semi annually. Treasury bills are non interest bearing and pay par value at maturity.
A customer wants to invest in a bond that has the least amount of reinvestment risk. Which of the following would be the most appropriate?
A) Treasury bond
B) Treasury note
C) Treasury STRIP
D) None of the above
C: Reinvestment risk occurs with income paying investments that are reinvested into lower paying vehicles. Treasury STRIPs are zero coupon bonds issued by the US Government. They do not pay any income or interest during the term of the bond. There would be no reinvestment risk, since there is no income to reinvestment.
Bond Investing Books
A customer places an order to buy ten 4% US Treasury Notes on Monday August 3rd for regular way settlement. This trade will settle on:
A) Monday August 3rd
B) Tuesday August 4th
C) Wednesday August 5th
D) Thursday August 6th
B: All US Government Securities, including Treasury Notes, settle on the next business day. This trade will settle on Tuesday August 4th.
Treasury Notes pay interest:
A) Monthly
B) Semi annually
C) Quarterly
D) At maturity
B: Treasury notes and treasury bonds pay interest semi annually. Treasury bills are non interest bearing and pay par value at maturity.
A customer wants to invest in a bond that has the least amount of reinvestment risk. Which of the following would be the most appropriate?
A) Treasury bond
B) Treasury note
C) Treasury STRIP
D) None of the above
C: Reinvestment risk occurs with income paying investments that are reinvested into lower paying vehicles. Treasury STRIPs are zero coupon bonds issued by the US Government. They do not pay any income or interest during the term of the bond. There would be no reinvestment risk, since there is no income to reinvestment.
Bond Investing Books
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