Money Market Instruments: Negotiable Certificate of Deposit

Main offshore source is commercial paper, mostly in US ______

Negotiable Certificate of Deposit - A wholesale deposit ($5 ______ or more) that has a fixed term with an agreed interest rate that can be traded in the money market.

NCDs cannot be withdrawn before ______, but can be traded in the money market to provide the depositor with liquidity.

Negotiable as they can be bought or sold in ______ market before they mature.

Bought by ______ investors such as company and financial institutions.

Banks issue domestic and ______ bonds.

Usually large amounts with terms of four to ______ years.

Issued through ______ which is the process of assigning cash flows form illiquid assets (holding loans) to securities (MBS) that are sold to investors.

SVR + 2% or SVR - 1% - Anything between 5-8% in Aus Important indication of lending quality is proportion of non-performing loans (Where borrowers are 90days or more behind on payments) - These have been low for decades ( 11 274 86-18088., $1 , 274 86.Effective Interest Rate on Retail Deposits Y in reffective -) > - 0 06183 or.- periods - = ~ 1/2 C7 (nom-rate -rateloper , pl (A) , period) , , e 6 18%.NCDs Bank of China (Aus) Limited; Subsidiary of Bank of China.Does this in order to ______ deposits - Can only accept deposits in Australia if there is an Australian subsidiary of the overseas company.

Bank of China Limited may only be conducting ______ or banking business in Australia.

Bank of China Aus accepts retail ______

Term deposit investment is fixed NCD is a deposit for a fixed term but is ______ meaning you can sell it in a secondary market.

NCD = ______ interest

What are the 3 Main Purposes of Banks' Holding of Securities? As a store of ______ (to assist in managing the maturity mismatch between deposits and loans)

When lending to small businesses, banks offer loans that are standardised in terms of the loan and application process and usually seek to secure the loan with a ______ over the borrower's property.

As low-risk ______ earning investments

As these ST term instruments are expire over 30, 60, 90 day time periods, they are then rolled over and so financing can be provided for longer periods of ______.

Fund managers have investment portfolios on behalf of clients and they invest in the ST term instruments in the money market to access Short Term ______ and to add liquidity t the portfolio in addition to shares and long term bonds as these are illiquid.

The GFC highlighted how the financial markets have a need for risk assessment and ______ due to market stability and this is done through the money market.

The money market holds the banking system's ______ reserves including loans to the inter-bank overnight market and securities that can be used in repos with the RBA.

Enables banks to meet their ______ requirements.

Banks use repurpose agreements where they sell securities to mainly RBA with an agreement to repurchase them later to provide ST ______.

The money market is a source of ______ for banks.

Provides the banking systems with a source of wholesale ______ and a low risk market for their liquid reserves.

Austraclear is the market’s clearinghouse and arranges settlement on a same day (T + 0) basis. They ensure we have smooth functioning of financial markets by managing settlement clearing and transitioning. Calculate and Analyse the Returns from Investments in Short Term Securities Part D. Investment Yields. The main component of investment returns is the interest earned - this is implicit, since security prices trend up over time to their FV. If securities are held to maturity, interest is the only return; Therefore, they earn the yield at which securities were purchased. Fixed income - income received in the form of interest. If a security was held for full maturity, the investor receives interest earned along with the final face value of the instrument. It becomes a predictable stream of income for investors. Financial Mathematics Yield to Maturity (YTM); Analyzing Holding Period Investment Yields - When securities are sold before maturity, the return to investors will include interest but may also include capital gains or losses.

Fill in the blanks:

1. Investment yields are calculated based on the interest earned and any potential capital _______.

The yield to maturity (YTM) is a key metric in analyzing investment returns. YTM considers both the interest earned and any potential capital _______.

Negotiable Certificate of Deposit (NCD) is a wholesale deposit with a fixed term and an agreed interest rate, often traded in the money market for liquidity. NCDs typically have a minimum deposit of $5 _______.

NCDs cannot be withdrawn before maturity, but they offer liquidity through trading in the money market, providing the depositor with _______.

A common offshore source of short-term funds is commercial paper, especially prevalent in the US _______.

Banks issue domestic and ______ bonds.

Usually large amounts with terms of four to ______ years.

Issuing through securitization is the process of assigning cash flows from illiquid assets (holding loans) to securities (MBS) that are sold to _______.

Bonds are a ______ asset that pay fixed interest which is safe and secure for investors.

Most Australian bonds are ______ credit risk due to being issued by stable, secure institutions.

There is a risk for institutions to ______ on coupon payments of bonds.

Market risks arise from changes in ______.

Bonds contribute to ______ discovery, revealing the level of long-term default-free interest rates and credit spreads.

Australian Treasury Bonds generally have ______ yields than US Government bonds.

The ______ free interest rates are revealed by trading Treasury Bonds.

The ______ for Treasury Bonds is very liquid, enhancing the quality of price discovery.

Trading in semi-government and non-government bonds reveals the size of ______ risk premiums.

Credit risk premiums trade at ______ yields than Treasury Bonds.