Debt Securities and Money Market Instruments
Chapters in this video
- 0:00 The debt and money market rogues gallery
- 1:05 Commercial paper and the 270-day SEC exemption
- 2:52 Brokered CDs, callability, and the secondary market
- 4:31 Eurodollar bonds: dollars on overseas vacation
- 5:18 Eurodollar annual interest payment trap
- 5:44 Variable-rate preferreds and floating dividends
- 7:02 Rapid-fire exam recap
What this video covers
- Why commercial paper has a 270-day maximum maturity, and how that ceiling keeps it exempt from Securities and Exchange Commission (SEC) registration
- Why commercial paper is always unsecured, and why only investment-grade corporations can realistically issue it
- How brokered certificates of deposit (CDs) differ from traditional bank CDs: secondary market trading, callability, and price sensitivity to rates
- What Federal Deposit Insurance Corporation (FDIC) coverage actually protects (bank default up to $250,000) versus what it does NOT protect (market loss from selling early into rising rates)
- Why Eurodollar bonds are U.S. dollar-denominated but issued outside the U.S., and why the "Euro" prefix has nothing to do with the euro currency
- The Eurodollar bond interest payment trap: annual payments, not semiannual like domestic corporate bonds
- Why variable-rate preferreds have less interest rate risk than fixed-rate preferreds, since the dividend resets to the benchmark while the price stays stable
Read the full lesson, free
This video's complete written lesson is free to read in the CertFuel app, no signup wall. When you're ready to drill the topic, the full Series 7 course adds adaptive practice questions and spaced-repetition flashcards.