Financial Markets Book Financial Markets For The Rest Of Us
An Easy Guide To Money, Bonds, Futures, Stocks, Options, And Mutual Funds
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by Robert Hashemian

Page 17

hand cannot be traded in the open market and can be only redeemed by the government. The following is list of securities issued by the US government. This is not a complete or detailed list, but it covers the important and popular securities.

Savings Bonds - These are non-marketable savings instruments designed for just about anyone who wants a marginal return and they can be purchased with only a few dollars. They come in a couple of different flavors, and depending on their issued year, have different maturity cycles. For example, current EE series mature in 17 years. Interest on savings bonds is compounded every six months and they can be redeemed at any time after the first six month of purchase. At maturity these bonds can be redeemed at their face value, otherwise they continue collecting interest for a period of several years until reaching final maturity. At this point they cease collecting interest.

Treasury Bills - Treasury bills (T-bills) are short-term US Treasury securities having maturity periods of three months, six months, or one year and issued in denominations of $10,000 to $1 million. T-bills are sold at a discount: investors purchase a bill at a price lower than the face value (for example, the investor might buy a $10,000 bill for $9,700). The return is the difference between the price paid and the amount received when the bill matures (if held to maturity, the return on the Tbill in the example would be $300).

Treasury Notes - These are intermediate-term securities having a maturity of one to ten years and issued in denominations of $1,000 or more. Notes pay interest (coupon payments) semiannually, and the principal is payable at maturity.

Treasury Bonds - These are long-term securities having maturities of 10 years or longer and issued in denominations of $1,000 or more. Bonds pay interest (coupon payments) semiannually, and the principal is payable at maturity. The 30-year Treasury bond is also known as the long bond, and it is the benchmark used by the financial entities to


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