What is a key difference between marketable government bonds and treasury bills?
A.
Treasury bills do not pay any coupon interest, while marketable bonds do
B.
Marketable government bonds may be sold at a discount while Treasury bills are sold at a premium
C.
Treasury bills trade in the over-the-counter market, while marketable bonds trade on the exchange
D.
Marketable government bonds actively trade in the secondary market while Treasury bills can only be bought from and sold to the government
The Answer Is:
A
This question includes an explanation.
Explanation:
Treasury bills (T-bills) have short maturities and are sold at a discount, with the return being the difference between the purchase price and par value at maturity, without coupon interest. Marketable bonds, however, pay coupon interest. The feedback from the document states:
"Because T-bills have such short maturities, they do not pay any coupon interest; instead, they are sold to investors at a discount from par value. When the T-bill matures, you receive par value. The difference between the price paid and the par value represents your return."
[Reference: Chapter 7 – Types of Investment Products and How They Are TradedLearning Domain: Understanding Investment Products and Portfolios, , , ]
IFC PDF/Engine
Printable Format
Value of Money
100% Pass Assurance
Verified Answers
Researched by Industry Experts
Based on Real Exams Scenarios
100% Real Questions
Get 65% Discount on All Products,
Use Coupon: "ac4s65"