treasuries and municipals. us treasury issued- default risk? still has interest rate market risk ...

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SUCCESS WITH BONDS Treasuries and Municipals

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Page 1: Treasuries and Municipals.  US Treasury issued- default risk?  Still has interest rate market risk  Interest exempt from state and local taxes  Less

SUCCESS WITH BONDS

Treasuries and Municipals

Page 2: Treasuries and Municipals.  US Treasury issued- default risk?  Still has interest rate market risk  Interest exempt from state and local taxes  Less

TREASURIES US Treasury issued- default risk?

Still has interest rate market risk Interest exempt from state and local

taxes Less risk = lower yield

Page 3: Treasuries and Municipals.  US Treasury issued- default risk?  Still has interest rate market risk  Interest exempt from state and local taxes  Less

TYPES OF TREASURIES

T-bills T-notes and bonds

$10,000 minimum 1 year, 3 or 6

month They pay interest

upfront Example Auction/discount

rate

2-10 years $1,000 for 4+ years $5,000 for shorter

Page 4: Treasuries and Municipals.  US Treasury issued- default risk?  Still has interest rate market risk  Interest exempt from state and local taxes  Less

MUNICIPALS Issued by states, counties, and their

agencies Exempt from federal and state tax Taxable equivalent yield General obligation vs. Revenue

BIG disctinction $5,000 minimum (pooled arrangements)

Page 5: Treasuries and Municipals.  US Treasury issued- default risk?  Still has interest rate market risk  Interest exempt from state and local taxes  Less

INSURED & TAXABLE Defaults are rare

but…. Underwriter

pays .1% to 2% premium

More attractive to investors

Issued to finance private business activities

Federal tax