1-How are the Treasury and federal agency securities different? What difference primarily explains the yield differential between the two securities?

2. Why is a "repo" like a secured loan?

3. In the stock market crashes of 1987, 1989, and shortly after "September 11th," money market yields dropped. What caused this drop in money market interest rates?

1. Calculate the gross profit that an underwriter would make if it sold $10 million worth of bonds at par (face value) and paid the firm that sold the bonds 99.25% of par.

2. If a bond dealer bought a $100,000 municipal bond at 90% of par and sold it at 93% of par, how much money did the dealer make on the bid-ask spread?

3. If a corporate bond paid 9% interest, and you are in the 28% income tax bracket, what rate would you have to earn on a general obligation municipal bond of equivalent risk and maturity in order to be equally well off? Given that municipal bonds are often not easily marketable, would you want to earn a higher or lower rate than the rate you just calculated?

4. Define the following terms: (a) private placement, (b) asset-backed security, (c) callable securities, (d) sinking fund provisions, and (e) convertible features of securities.

5. What factors have contributed to the increased globalization of bond markets?