When you hear advertisements claiming to "fix" your credit, you should consider changing the station. There is no quick "credit fix." The best that you or anyone else can do is identify and corre... |
Other than winning the lottery, it is impossible to obtain financial freedom without a financial budget. Developing and living by a budget allows you to track your income as well as your expenses.... |
The housing market is experiencing serious problems. With resets of Adjustable Rate Mortgages (ARM), hundreds of thousands of Americans are losing their homes. What can you do? Too often, homeo... |
Our Banking courses are designed to educate consumers on all aspects of banking. It includes basic topics on choosing a bank, learning the differences between banks and credit unions, properly ... |
The Budgeting courses not only show you step by step how to establish and maintain a budget, they also educate you on how to make the purchases you need without busting your budget wide open. I... |
Wealth creation is not limited to making more and more money. It also focuses on some of the schemes and scams currently flooding the internet, mailboxes and phone lines worldwide. Accordingly... |
A man authorities say was part of a Brooklyn husband-and-wife identity theft team has been sentenced to 30 years in prison for the deaths of three identity theft victims, prosecutors said Thursday.
Which presidential candidate paid the most in taxes? Who is the most charitable? Here's an inside look at the top candidates' 2010 income tax returns.
States have until late Monday to agree to the latest draft deal aimed at relieving homeowners struggling with mortgages bigger than their home's value.
Cash Equivalents
Treasury bills
Treasury bill or T-bills are short-term debt obligations backed by the U.S. government. This obligation has a maturity period (a time when the investor can receive her return) of less than one year. T-bills are sold in denominations of $1,000 up to a maximum purchase of $5 million. These bills commonly have a maturity of one month (four weeks), three months (13 weeks) or six months (26 weeks).
These obligations are issued competitively through a bidding process. T-bills are discounted from par. For example, an investor would pay $960 for a T-bill that would yield a 4% return over a four week period and receive $1,000 upon the bill’s maturity. T-bills pay an appreciated return to the holder instead of paying fixed interest payments like conventional bonds.
Commercial paper
Corporations issue unsecured, short-term debt instruments, typically for ordinary business expenses like accounts receivables, inventories and meeting other short-term liabilities. Commercial paper maturities rarely range any longer than 270 days. Similar to T-bills, this debt is issued at a discount, reflecting the prevailing market interest rates.
Commercial paper is a way for corporations with high-quality debt ratings, as rated by Moody’s, Standard & Poor and other ratings agencies, to raise capital without the usual backing of collateral. Therefore, the firm’s debt high-quality rating will encourage buyers to purchase their debt without having to offer a substantial discount (higher cost) for the debt issue.
CDs and banker’s acceptance
A certificate of deposit (CD) is a promissory note, typically issued by commercial banks. It entitles the owner to a predetermined rate of interest. A CD has a specific maturity date that can be issued in any denomination. They are insured by the FDIC. CDs typically have terms that range from one month to five years. They are deposits which restrict holders from withdrawing funds when they’d like to. Although it is still possible to withdraw the money, this action will often incur a penalty.