Describe each type of Marketable Securities and describe the key elements of the Theory of Budget Execution.
Types of Marketable Securities:
Marketable securities are those securities that can easily be converted into cash without losing their value. This implies that they are highly liquid. There are various types of marketable securities. These are, treasury bills are often purchases at discounted prices and mature in one year or less where the full face value of the mount is received; zero-coupons securities (STRIPS) which are treasury securities separate the principal from the interest and do not make periodic interest payments; treasury inflation-protected securities (TIPS) are those securities whose value is linked to the inflation where the principle amount is adjusted every six months to reflect inflation. This often are offered in 5, 10 and 30 year maturities; and treasury notes and bonds are those securities with more than a year maturity and which every six months pays a fixed interest to the owner until the security matures when the principal ...
The solution discusses marketable securities and the Theory of Budget Execution.