Financial international Markets

Topics: Federal Reserve System, Repurchase agreement, Federal funds Pages: 4 (961 words) Published: May 1, 2014

Treasury Bill
Treasury Bill is basically a short-term securities issued by the Government. Treasury bills (T-bills) are debt obligations of the U.S. Government that mature in one year or less. The U.S. Treasury regularly sells bills with maturities of three months (13 weeks), six months (26 weeks), and one year (52 weeks). All bills are sold at discount so that the return to the investor is the difference between the purchase price of the bill and its face or par value. The Characteristics of Treasury Bill are:

1. These are issued as a promissory note at discount over their face value. 2. It is used to raise short term funds to bridge seasonal/temporary gaps between receipt and expenditure of the Govt. 3. It is a negotiable instrument.

4. Assured yield and low transaction cost
.5. Eligibility for inclusion in SLR.
Default Risk
-T-bills are on the guarantee of government, so theyhave minimum default risk Liquidity-
T-bills are highly liquid instrument of financial market.Securities can be liquidated when ever the holder wants. Minimum Denomination
-T-bills are trade on the face value of Rs.100 in Pakistan and in denominations of multiples of 100 Federal funds
federal funds are overnight borrowings between banks and other entities to maintain their bank reserves at the Federal Reserve. Banks keep reserves at Federal Reserve Banks to meet their reserve requirements and to clear financial transactions. Transactions in the federal funds market enable depository institutions with reserve balances in excess of reserve requirements to lend reserves to institutions with reserve deficiencies. These loans are usually made for one day only, that is, "overnight". The interest rate at which these deals are done is called the federal funds rate. Federal funds are not collateralized; like Eurodollars, they...
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