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the quoted price. If the marketability of is low, high yield is required to attract the investors. Thus, the yield differential between different securities of the same maturity is caused not only by differences in default risk but also by differences in marketability.

Types of Marketable Securities

In this section, we describe briefly the more prominent marketable securities available for investment. Space prohibits the discussion of longer term investments, although corporation do invest excess funds about to be described mostly money market instruments, which by definition, are highly marketable and subject to little default risk. Also, the usual definition restricts maturity of a money market instrument to less than a year.

Treasury Security

US treasury obligations constitute the largest segment of the money markets. The principal securities issued are bills, tax anticipation bill, and bonds. The treasury auctions bills weekly with maturities of 91 days and 182 days. In addition, 9 months and 1 year bills are sold very month. All sales by the treasury are by auction. Smaller investors can enter a “non competitive “bid which is fill filled at the average price of successful competitive bids. Treasury bills, carry no coupon but are sold on a discount basis. Denominations range from $ 10,000 to $ 1 million. These securities are popular with some companies as short-term.

The original maturity on treasury notes is 1 to 10 years, whereas the original maturity on Treasury bonds is over 10 years. With the passage of time, of course, a number of these securities have maturities of less than 1 year and serve the needs of short term investors. Notes and bonds are coupon issues, and there is an active market for them. Overall, Treasury securities are the safest a and most marketable investments. Consequently. They provide the lowest yield for a given maturity of the various instruments we consider.

Repurchase agreements

This is an agreement where the business sells its securities to the investors for a specific time period with an agreement to repurchase the same from the investor after a specified time period at a pre decided price level. Government also issue these types of securities. Thus, repurchase agreements give the investor a great deal of flexibility with respect to maturity.

Agency Securities

Obligations of various agencies of the federal government are guaranteed by the agency issuing the security, but not by the US government as such. In addition, there are a number of government sponsored, quasi-private agencies. Their securities are not guaranteed by the federal government, not is there any stated “moral” obligation, but there is an implied banking. It would be hard to Imagine the federal government allowing them to fail. Major government sponsored agencies include the Farm Credit System. Agency issues typically provide a modest yield advantage over Treasury securities of the same maturity, and they have a fairly high degr本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。