Unit 7.1

United States Treasury notes are intermediate length securities. Treasury notes are not issued with maturities of

4 years

The longest initial maturity for U.S. T-bills is

52 weeks

Which of the following choices lists Treasury bills, Treasury bonds, and Treasury notes in ascending order of maturity?

Bills, Notes, Bonds

Which of the following statements regarding Treasury receipts are true? Interest is paid annually. Interest is paid at maturity. Interest is taxed annually. Interest is taxed at maturity.

II and III

Which of the following is a debt instrument that pays no periodic interest?

STRIPS

Debt instruments put up for auction by the U.S. Treasury that offer intermediate maturities best describes

Treasury notes

Your customer wishes to lock in a long-term yield with minimal risk and is not interested in regular income. Which of the following securities should you recommend?

Treasury STRIPS

A quote of 2.20 bid 2.18 offered would most likely be a quote on

a T-bill.

If a customer believes interest rates have peaked, and therefore, wants to buy long-term, fixed-income securities providing semiannual interest payments, you would recommend

bonds that do not have a call feature

T-bills are quoted

on an annualized discount yield basis

All of the following statements regarding Treasury bills are correct except

most Treasury bill issues are callable

Which of the following securities is an original issue discount obligation?

13-week U.S. Treasury bills

U.S. government securities that are deposited with a trustee against which certificates are sold representing principal payments only on the securities are clipped bonds. stripped bonds. subject to annual taxation on the per-year accreted amount. subject to taxation at maturity.

II and III

Which of the following statements regarding Treasury bills are true? They are sold in minimum denominations of $10,000. They are offered with maturities ranging up to 52 weeks. Their interest is exempt from taxation at the state level. They are callable by the U.S. Treasury at any time before maturity.

II and III

Which of the following statements regarding Treasury receipts is not true?

Interest income is taxed at maturity

Which of the following is not a money market instrument?

Newly issued Treasury notes

Which of the following securities can generate phantom income?

TIPS Bonds

All of the following are true except

Treasury bills are quoted in 1/8ths and as a percentage of par.

All of the following are characteristics of Treasury receipts except

accumulated interest is not subject to federal taxation