International Finance and Treasury MCQ Questions and Solutions with Explanations | Management

Bids of bidder which tells that how much treasury bills bidder wants to buy is classified as non-competitive bids. Non-competitive bidding means the bidder would be able to participate in the auctions of dated government securities without having to quote the yield or price in the bid.

Financial instrument such as commercial paper can be sold directly. Commercial paper is an unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts payable and inventories and meeting short-term liabilities. Maturities on commercial paper rarely range longer than 270 days.

Process of issuing treasury bills is classified as treasury bills auction. Bill auction is a public auction for Treasury bills that is held weekly by the U.S. Treasury. As of 2019, there are 24 authorized primary dealers that are required to bid directly upon each issue. This is the manner in which all U.S. Treasury bills are issued.

For a particular security transaction, agreement is classified as 'reverse repo' with point of view of security buyer. Security Buyer is a professional security media platform that gathers the industry information and updates, and provides unique insights of the evolving security industry. We are benefiting from its strong marketing power, as well as the well-connected professional services. Security Buyers is one of the most effective media platforms in the marketplace.

Submitted bids in treasury bills auction consists of types which are competitive bids and non-competitive bids. Treasury delivers securities to bidders who were awarded securities in a particular auction. In exchange, Treasury charges the accounts of those bidders for payment of the securities. Treasury bills are issued at a discount or at par (face amount) and are paid at par at maturity.

The type of market in which Eurodollar are traded is classified as Eurodollar market. The term eurodollar refers to U.S. dollar-denominated deposits at foreign banks or at the overseas branches of American banks. Because they are held outside the United States, eurodollars are not subject to regulation by the Federal Reserve Board, including reserve requirements.

Interest rate paid on traded Eurodollars is called as London interbank offered rate. The London Interbank Offered Rate is the average interest rate at which leading banks borrow funds from other banks in the London market.

Interest rate of certificate of deposits is quoted using a time span of 360 day a year. A certificate of deposit (CD) is a product offered by banks and credit unions that offers an interest rate premium in exchange for the customer agreeing to leave a lump-sum deposit untouched for a predetermined period of time.

Non-competitive bidders get allocation of treasury bills on preferential basis. Treasury Bills, also known as T-bills are the short-term money market instrument, issued by the central bank on behalf of the government to curb temporary liquidity shortfalls.

Type of instrument whoever holds it gets interest and principal amount is classified as bearer instrument. A bearer instrument, or bearer bond, is a type of fixed-income security in which no ownership information is recorded and the security is issued in physical form to the purchaser. The holder is presumed to be the owner, and whoever is in possession of the physical bond is entitled to the coupon payments.