RSM330H1 Lecture Notes - Lecture 1: Federal Deposit Insurance Corporation, Guaranteed Investment Certificate, Primary Dealer
Document Summary
Treasury bills: 3, 6, or 12 month maturities, issued biweekly. Weekly auction among 50 primary dealers in us. Biweekly auction among 10 primary dealers in canada. Primary dealers must have domestic trading operations and track record of providing good liquidity to market. Federal deposit insurance corporation (us) insures up to ,000, cdic insures up to. Almost all cp rated by credit agency: cds, cps have poor secondary market liquidity, are not default free. Bankers" acceptance: bank assumes responsibility for ultimate payment. One day long where security serves as collateral. Pay semi-annual coupons: european bonds pay annual coupons, cmhc. Municipal governments: smaller market than us. Should use equivalent taxable yield to compare munis to other taxable bonds. Airport, hospital: rated by credit agency, ftse/tmx bond universe index, mortgage-backed securities. Uncertain term to maturity due to prepayment risk of mortgage by borrowers. Board lot: shares typically trade in board lots of 100 shares.
