nonmarketable us gov securities unit 2
2. Nonmarketable bonds are nonmarketable because
No secondar market exist. Buying and selling is effected directly between investor and agents of US treasury like commercial banks
1. US treasury issues nonmarketable securities in the form of
Savings bonds
12. . If the customer were interested in buying marketable U.S. government debt, the customer would purchase
Treasury Inflation Protection Securities (TIPS).
6. Default risk would generally not be a concern regarding securities issued by the
US Treasury Department.
14. The interest rate on SERIES I has two components
a fixed rate and an inflation rate tied to the Consumer Price Index.
8. he interest rate on Series I bonds has two components
a fixed rate and an inflation rate tied to the Consumer Price Index.
10. Series I bonds are an
accrual-type security,
22. Series EE bonds may not be used
as collateral for a loan.
4. Series EE They may be purchased in denominations .
as low as $25
9. (series I bonds) The inflation component is recalculated
every six months.
3. Series EE savings bonds are purchased at
face amount and earn a fixed rate of return.
25. Series I bonds are sold at
face value and they grow in Interest every month and in value with the addition of the inflation-adjusted interest.
15. Series EE bonds are designed for individual investors, sold at and redeemed at
face value, and redeemed at an amount that includes the interest income which is calculated and accrues every six months.
17. Savings bonds are
not marketable.
7. Series I bonds have been designed for investors seeking t
o protect the purchasing power of their investment. T
13. Series I bonds have been designed for investors seeking to
protect the purchasing power of their investment.
24. Series I bods were designed for investors wishing to
protect the purchasing power of their investment.
28. As payments are received from the underlying mortgages, interest is paid pro rata to all tranches, but principal
repayments are paid to the first tranche until it is retired
20. Series EE bonds, usually known as () and sold at
savings bonds, are sold at face value to the purchaser and are nonnegotiable.
29. The process of pooling assets into a single financial instrument for this purpose is known as .
securitization
16. Marketability refers to the ability of the owner to
sell (market) the Series EE bond to anyone who may desire to purchase it.
23. I bonds are nonmarketable U.S. government securities which have a variable
semiannually adjusted inflation rate that is based on the Consumer Price Index (CPI).
5. Accrued interest on Seres EE bonds is exempt from
state and local income taxes, but not federal taxes.
26. Interest paid on I bonds is exemp
t from state and local taxes but is taxable at the federal level.
18. Savings bonds can be redeemed only by
the government.
11. Accrual type security meaning
the interest is added to the bond's face value each month and is paid when the BOND IS SOLD OR REDEEMED
21. Since EE bonds must be redeemed by
the original purchaser, ownership cannot be transferred, which makes them a nonmarketable security.
27. Although, federal income taxes can be deferred on I bonds for up
to 30 years or until the bonds are redeemed, whichever comes first.
19. Savings bonds are not allowed to be
transferred from one owner to another; hence, they are nonmarketable.
