nnge ate Pisk for the investor. Private placements offer Ids but lack liquidity.
ID: 2764491 • Letter: N
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nnge ate Pisk for the investor. Private placements offer Ids but lack liquidity. Promissory notes are usually issued n officer of the firm, or are held by the firm and issued by a key higher yiel person. Insurance-based contracts include GICs and annuities. MINICASE Your client is 66 years old and preparing for retirement. All of his investments in both his pension plans and his directly owned portfolio are in stocks. He realizes he should make his portfolio a little more conservative, and should switch some of his stocks into bonds. This would be more appropriate in his tax-qualified accounts. Although you have not made a final recommendation as to what percentage of the portfolio should be in fixed income securities you are also starting to think about which bonds would be most appropriate. 2 If the client wants 5 percent of the portfolio to be absolutely safe from any form of risk, have excellent liquidity, and yet still earn a little income, the best selection for this part of the portfolio would be 1. (A) Treasury bills (B) Treasury notes (C) Treasury bonds (D) Series I bondsExplanation / Answer
Treasury Bill
A treasury bill (T-Bill) is a short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations of $1,000 up to a maximum purchase of $5 million and commonly have maturities of one month (four weeks), three months (13 weeks) or six months (26 weeks).
T-bills are issued through a competitive bidding process at a discount from par, which means that rather than paying fixed interest payments like conventional bonds, the appreciation of the bond provides the return to the holder.
Treasury Note
A treasury note is a marketable U.S. government debt security with a fixed interest rate and a maturity between one and 10 years. Treasury notes can be bought either directly from the U.S. government or through a bank.
Treasury Bonds
A treasury bond (T-Bond) is a marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest payments semi-annually and the income that holders receive is only taxed at the federal level.
Series I Bonds
Series I savings bonds are a low-risk savings product. While you own them they earn interest and protect you from inflation.
Conclusion: By going through all of the definitions we can say that T-Bill is Risk free Highly liquid with little revenue in form of discount.
2D,3C, 4A, 5B
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