Treasury and Agency Bonds

Flashcards about Treasury and Agency Bonds

US Treasury Obligations

Obligations issued directly by the US Treasury Department to fund government spending.

Treasury Bills

Short-term US Treasury obligations (≤ 1 year) issued at a discount; zero-coupon bonds.

Treasury Notes

Medium-term US Treasury obligations (2-10 years).

Treasury Bonds

Long-term US Treasury obligations (20-30 years).

U.S. Treasury Market

The most important securities market in the world; crucial for monetary policy and the global financial system.

Risk-free Rate

Used for discounting cash flows and as a benchmark for other fixed-income securities.

Auctions

Treasury bills, notes, and bonds are issued via periodic .

Par

Notes & Bonds price quotes are relative to , in 32nds.

TIPS

Treasury Inflation-Protected Securities, which tie payments to inflation.

FRNs

Treasury Floating Rate Notes, where coupons are variable.

US Treasury Strips

Zero-coupon bonds constructed by disaggregating coupons and principal into new bonds.

Agency Bonds

Bonds issued by Government Sponsored Enterprises (GSEs) or federally related institutions.

Government Sponsored Enterprises (GSEs)

Formerly private companies chartered by the government to help finance residential mortgages (e.g., Fannie Mae, Freddie Mac).

Federally Related Institutions

Agencies of the federal government.

Fannie Mae (FNMA)

Federal National Mortgage Association.

Freddie Mac (FHLMC)

Federal Home Loan Mortgage Corporation.