When federal, state, and local governments issue securities, what key roles do they play in financial markets, particularly in the bond and mortgage markets, and how do they affect you? Describe these financial markets in which goverments participate and how they function. What securities have federal, state, and local governments recently issued?
The federal, state and local governments issue securities such as U.S. Treasuries and municipal bonds (Gannon, 2006). U.S. Treasuries and Municipal bonds are a types of government bonds and are considered to be somewhat risk-free because having investing in either treasury or or municipal bond, the investor will definitely get their principal amount back in addition to any interest payments.
Key Roles and How Bonds Work
When you invest in a treasury bond you are lending the U.S. government money for a certain period of time. Before the period of time expires, you will receive a series of regular interest payments. The interest rates on debt securities such as bonds are called yields. Therefore, depending on the principal amount you allowed the U.S. government to borrow, you would multiply your yield percentage by the principal to determine how much you would receive before the time period expires. Once the time period expires, you will get ...
The solution evaluates the activities and impact of the U.S. treasury department.