Debt Instruments: Rapid Fire
Chapters in this video
- 0:00 The see-saw: rates up, prices down
- 0:40 Treasury, municipal, and corporate tax comparison
- 1:43 Premium, discount, and par yield ordering
- 3:17 Callable versus convertible features
- 4:04 Fallen angels and credit ratings limits
- 4:58 Mortgage-backed securities prepayment and extension risk
- 5:36 Bond quotes and par value traps
- 6:56 Phantom income from zero-coupon bonds and STRIPS
- 7:33 Money market 270-day rule and TIPS mechanics
- 8:20 FDIC coverage, MSRB, and FINRA roles
- 9:10 Rapid-fire exam recap
What this video covers
- Why bond prices and interest rates move in opposite directions, and how to apply the see-saw rule under any rate scenario
- The tax treatment of Treasuries (exempt from state and local tax), municipals (exempt from federal tax), and corporates (fully taxable)
- Which agency securities carry explicit full faith and credit backing, and which rely on implied backing only
- How to rank coupon yield, current yield, yield to maturity (YTM), and yield to call (YTC) for premium, discount, and par bonds
- Who benefits from callable versus convertible features, and why each pays higher or lower yields
- What phantom income means for zero-coupon bonds and Separate Trading of Registered Interest and Principal of Securities (STRIPS), and how Treasury Inflation-Protected Securities (TIPS) adjust principal
- The par value, investment-grade cutoff, commercial paper maturity limit, and Federal Deposit Insurance Corporation (FDIC) coverage figures that appear as standalone questions
Read the full lesson, free
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