Fin3244 Lu Yang Exam II

Bond Equivalent Yield (BEY)

The annual percentage rate converted from the bank discount rate on a Treasury bill

Effective Annual Rate (EAR)

the actual rate paid (or received) after accounting for compounding that occurs during the year

Discount Yield

Difference between the original purchase price of a T-bill and what the Treasury pays you at maturity

What are T-bills?

Treasury bills

Short term discount bonds (less than a year maturity)

Difference between competitive vs non-competitive bids?

?

How are T-Bills sold?

tender (competitive auction)

What is a repo agreement?

A financial institution (such as a bank or broker dealer) raises cash by temporarily selling some of the securities it holds with an agreement to buy back the securities at a later date at a slightly higher price