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Investment Securities - Treasury Bills
U.S. Government and Federal Agency Instruments
Money market securities issued by the U.S. government and its agencies include the following vehicles:
* Treasury bills (T-bills)
* Treasury and agency securities with remaining maturities of less than a year
* Federal National Mortgage Association (Fannie Mae) short-term discount notes
* Federal Home Loan Bank short-term discount notes and interest-bearing notes
* Federal Farm Credit Bank notes and bonds maturing in one year
* Short-term discount notes issued by other smaller agencies
We will discuss U.S. Government and Federal Agency Instruments further in a later section.
Municipal Government Instruments
Municipalities issue tax-exempt money market securities that include the following notes:
* Construction loan notes (CLNs)
A short-term obligation in the form of a note, used for the funding of construction projects such as housing developments. In most cases, the note issuers will repay the note obligation by issuing a longer term bond and using the proceeds from the bond to pay back the note.
* This type of financing is most often seen at the municipal level: for example, a large city might use a construction loan note to finance a large housing project to meet the demands of its growing population.
Revenue anticipation notes (RANs)
* A short-term debt security issued on the premise that future revenues will be sufficient to meet repayment obligations.
* RANs are generally used to generate immediate investment capital to begin a large project. These securities are repaid with future expected revenues from the completed project, which may come from sources like turnpike tolls or stadium ticket sales.
Bond anticipation notes (BANs)
* A short-term interest-bearing security issued in the anticipation of larger future bond issues.
* Bond anticipation notes are smaller short-term bonds issued by governments and...