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Questions and Answers
Which type of Treasury security has the longest term of borrowing?
How often does the U.S. Treasury hold public auctions for Treasury Bills?
Which type of Treasury security pays interest semi-annually and is exempt from state tax?
Which type of bond is backed by the municipality's total tax and operating revenue?
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What is the main difference between General Obligation Bonds and Revenue Bonds?
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What is the purpose of issuing Special Tax Bonds?
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Which type of bond is issued to fund projects that do not provide a meaningful benefit to the general public and are not tax-exempt?
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What is the typical maturity period for Municipal Notes?
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Which type of bond is issued to enable the construction of an income-producing facility, where the revenue from business operations pays the interest and repays the principal at maturity?
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Which type of bond does not pay any interest but is purchased below the face value and receives the full value at maturity?
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What is the interest payment frequency for corporate bonds?
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When does a company repay the principal amount to bondholders?
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Which of the following is NOT a characteristic of money market securities?
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What is the typical length of time for a Certificate of Deposit (CD)?
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What is the difference between traditional CDs and brokered CDs?
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Study Notes
Treasury Securities
- Treasury bonds have the longest term of borrowing.
- The U.S. Treasury holds public auctions for Treasury Bills every week.
Municipal Bonds
- General Obligation Bonds are backed by the municipality's total tax and operating revenue.
- The main difference between General Obligation Bonds and Revenue Bonds is the source of repayment.
- Special Tax Bonds are issued to fund specific projects, such as infrastructure or public facilities.
- Private Activity Bonds are issued to fund projects that do not provide a meaningful benefit to the general public and are not tax-exempt.
- Municipal Notes have a typical maturity period of less than a year.
- Revenue Bonds are issued to enable the construction of an income-producing facility, where the revenue from business operations pays the interest and repays the principal at maturity.
Corporate Bonds
- Corporate bonds typically pay interest semi-annually.
- The interest payment frequency for corporate bonds is semi-annual.
- Companies repay the principal amount to bondholders at maturity.
Other Securities
- Zero-Coupon Bonds do not pay any interest but are purchased below the face value and receive the full value at maturity.
- A characteristic of money market securities is that they are liquid, low-risk, and have a short maturity period.
- One characteristic that is NOT typical of money market securities is that they are long-term.
- Certificates of Deposit (CDs) have a typical length of time ranging from a few weeks to several years.
- The difference between traditional CDs and brokered CDs is that brokered CDs are sold by brokerage firms and offer more flexibility.
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Description
Test your knowledge on Treasury Securities and the borrowing methods used by the United States government. This quiz covers topics such as Treasury Bills, Treasury Notes, and interest payment structures. Challenge yourself to see how well you understand these important financial instruments.
