Government Securities Review

What is the primary purpose of government securities?

• To increase tax revenue

• To fund daily operations and special projects

• To regulate the stock market

• To control private sector investments

Which of the following best describes a key characteristic of U.S. government securities?

• They offer the highest interest rates in the market

• They can only be purchased by institutional investors

• They guarantee full repayment of invested principal at maturity

• They are only available in 30-year terms

Why are U.S. Treasury securities considered "risk-free" investments?

• They are insured by private companies

• The government can print money to satisfy demand

• They always offer high returns

• Foreign investors guarantee them

What happened during the Russian debt crisis of 1998?

• Russia increased interest rates on bonds

• Russia defaulted on its debt and devalued the ruble

• Russia purchased more U.S. Treasury bonds

• Russia eliminated all government securities

What is a potential disadvantage of investing in government securities?

• They are difficult to purchase

• They cannot be resold

• They offer lower interest rates compared to corporate bonds

• They have high default risks

How can retail investors purchase U.S. government securities?

• Only through international brokers

• Through the Treasury Department’s website, banks, or brokers

• Exclusively at federal reserve banks

• Only during quarterly auctions

What are government securities called in the United Kingdom?

• JGBs

• OATs

• Gilts

• Yankees

As of August 2024, what was the approximate yield on a four-week T-bill?

• 3.89%

• 4.57%

• 5.28%

• 4.10%

What is the primary method the Federal Reserve uses to control money supply through government securities?

• Changing interest rates daily

• Open market operations (OMO)

• Printing more securities

• Canceling existing bonds

What is the minimum holding period for savings bonds?

• 6 months

• 12 months

• 18 months

• 24 months