How are treasury bills (T-bills) taxed?

July 8, 2024 No Comments

A: Interest earned on all U.S. Treasury securities, including treasury bills, is exempt from taxation at the state and local level but is fully taxable at the federal level. At the end of each year, owners of treasury bills should be sent a 1099-INT form

Are money market accounts considered checking or savings?

July 8, 2024 No Comments

A: A: A money market account (MMA) is neither a checking account nor a savings account, though it does contain elements of both. Like a checking account, an MMA offers check-writing privileges, though they are limited to around three per month. Some MMAs also offer

Are U.S. banks authorized to issue bank guarantees or medium term notes (MTNs)?

July 8, 2024 No Comments

A: Bank guarantees and medium term notes (MTNs) are different types of instruments that serve different purposes for corporations. Bank guarantees are instruments issued by a bank or other lending institutions ensuring that the money owed by a debtor will be paid. In other words,

Calculate the total return of the municipal bond described below.

July 8, 2024 No Comments

A: Jane and Fabbio Salvatore have just discovered that a Fabulous Florence municipal bond will be offered to support a bridge development in Fabbio’s hometown in Florence, OH. They want to purchase the bond at $1,000, but end up buying the 10% bond at $1,020.

Can a bond have a negative yield?

July 8, 2024 No Comments

A: The return a bond provides to an investor is measured by its yield, which is quoted as a percentage. Current yield is a commonly quoted yield calculation used to evaluate the return on a bond for a one-year period. It only accounts for the interest,

Can a church issue a bond?

July 8, 2024 No Comments

A: The North American Securities Administrators Association (NASAA) has acknowledged that “church bonds” are allowed to be issued under certain guidelines. These bonds can be issued only by religious affiliates that are identified as being a “church”, “parish”, “mosque” or a “synagogue”, and can only

Can Private Corporations Issue Convertible Bonds?

July 8, 2024 No Comments

A: A convertible bond is a debt that may be converted into a predetermined amount of the underlying company’s equity at certain times during the bond’s life, usually at the discretion of the bondholder. The first step to answering this question requires defining the term “private corporation.” Many

Collateralized Mortgage Obligation vs. Collateralized Bond Obligation

July 8, 2024 No Comments

A: Both collateralized mortgage obligations (CMOs) and collateralized bond obligations (CBOs) are similar in that investors receive payments from a pool of underlying assets. The difference between these securities lies in the type of assets that provide cash flow to investors. What Is a Collateralized Mortgage

Current yield vs yield to maturity

July 8, 2024 No Comments

A: Both the current yield and yield to maturity (YTM) formulas are methods of calculating the yield of a bond. However, these two methods of calculation have different applications depending on the goals of the investor. Bond Basics When a bond is issued, the issuing

Do convertible bonds have voting rights?

July 8, 2024 No Comments

A: Convertible bonds usually have no voting rights until they are converted. Even after conversion, they may not be granted voting rights. A convertible bond is a form of debt that features an embedded stock option allowing the convertible bondholder to convert his/her bond into

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