treasuries and municipals. us treasury issued- default risk? still has interest rate market risk ...
TRANSCRIPT
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SUCCESS WITH BONDS
Treasuries and Municipals
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TREASURIES US Treasury issued- default risk?
Still has interest rate market risk Interest exempt from state and local
taxes Less risk = lower yield
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TYPES OF TREASURIES
T-bills T-notes and bonds
$10,000 minimum 1 year, 3 or 6
month They pay interest
upfront Example Auction/discount
rate
2-10 years $1,000 for 4+ years $5,000 for shorter
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MUNICIPALS Issued by states, counties, and their
agencies Exempt from federal and state tax Taxable equivalent yield General obligation vs. Revenue
BIG disctinction $5,000 minimum (pooled arrangements)
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INSURED & TAXABLE Defaults are rare
but…. Underwriter
pays .1% to 2% premium
More attractive to investors
Issued to finance private business activities
Federal tax