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Chapter 3. Debt market - Coggle Diagram
Chapter 3. Debt market
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Treasury bills (T-bills)
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The lowest risk - high liquidity - issued at a discount from par value - only one cashflow - pay interest at PV
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Commercial Paper (CP)
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Same maturity, PV: TSSL CP > TSSL T-bills -> PP CP < PP T-bills -> TSCK CP > TSCK T-bills
Banker's Acceptance (BA)
Exporter is A, importer is B. A hold a BA, B cant pay cash -> the bank buy BA from A. Return = future payment from B - price paid for BA
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Repo
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With repo: B can sell securities to C before specified date in contract with A. B n C make a new contract.
Background on bond
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Onwership structure: Beaer, registered
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Government bond market
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Types: Coupon bonds, Perpetual bonds, Zero coupon bond
Coupon bonds: n, F, C, iC, coupon date
zero-coupon bonds: n, F, C=0, iC=0, discount bond
Perpetual bonds: không có n, principal x maturity, F, C
Treasury bond auctions: Periodic auctions, Submit bids, Tresury ranks the competitive bids in descending order, The lowest accepted bid price - primary market
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