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	{ '''Bills of exchange'''		{ '''Bills of exchange'''
	\|type="{}"}		\|type="{}"}
	A bill of exchange is { negotiated } instrument which is sold at a { discount } to its face value. Its term can vary from { one } { day } to { six } { months }.		A bill of exchange is a { negotiated } instrument which is sold at a { discount } to its face value. Its term can vary from { one } { day } to { six } { months }.
	The main use of bills of exchange in Australia is as a means of obtaining { credit }, but not necessarily related to specific trading transactions. Bills not related to trade transactions are called '{ accommodation }' bills.		The main use of bills of exchange in Australia is as a means of obtaining { credit }, but not necessarily related to specific trading transactions. Bills not related to trade transactions are called '{ accommodation }' bills.

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	[[Interest Rate Markets Quiz 4]]		[[Interest Rate Markets Quiz 4]]
			[[Interest Rate Markets Quiz 6]]

Egge: New page: { '''Treasury Notes''' |type="{}"} Treasury notes are issued with terms to maturity of { 5 }, { 13 } or { 26 } weeks. Tenders are lodge at { 12 ...

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New page: <quiz display=simple shuffle=true case=(i)> { '''Treasury Notes''' |type="{}"} Treasury notes are issued with terms to maturity of { 5 }, { 13 } or { 26 } weeks. Tenders are lodge at { 12 ...

New page

<quiz display=simple shuffle=true case=(i)>
{ '''Treasury Notes'''
|type="{}"}
Treasury notes are issued with terms to maturity of { 5 }, { 13 } or { 26 } weeks.
Tenders are lodge at { 12 } : { 45 } pm on each Wednesday, results are announced the same afternoon, and stock must be taken up the next business day.
The dominant investors in Treasury notes are { banks }, which invest in them to meet asset requirements agreed between the banks and the { Australian } { Prudential } { Regulatory } { Authority } and for liquidity management purposes.
Treasury notes are sold on a { yield } { basis }, and are heavily traded between { banks } and other financial institutions on the secondary market.

{ '''Bills of exchange'''
|type="{}"}
A bill of exchange is { negotiated } instrument which is sold at a { discount } to its face value. Its term can vary from { one } { day } to { six } { months }.
The main use of bills of exchange in Australia is as a means of obtaining { credit }, but not necessarily related to specific trading transactions. Bills not related to trade transactions are called '{ accommodation }' bills.

{
|type="{}"}
The parties in a bank-accepted bill of exchange are the { drawer }, { acceptor } and { payee }.

{ '''Commercial Paper (promissory notes)'''
|type="{}"}
Promissory notes differ from bills of exchange in that there is no { acceptor } and they are marketable without { endorsement }.
The are only two parties: the { issuer } (borrower) and the { bearer } (creditor).

{ '''FRAs'''
|type="{}"}
Advantages:
* No { margin } { calls }: as FRAs do not go through a futures exchange there is not requirement for margin deposits or margin variation calls, so there is a corresponding savings in administration costs and in the costs of financing deposit and margin calls.
* { flexibility (i) }: whereas futures contracts are standardized as to amount, settlement day, etc., FRAs are ________ and can be negotiated to fit precisely the hedging needs. However, the time limit period is limited to { two } years maximum.
* Limited { credit } { risk }: the institutions exposure to _____ ____ is limited to the interest variation based on the principal and is not the full principal amount.
* { Off }-{ balance } { sheet }: the FRA is settled by exchange of a cash sum and consequently does not gross up the balance sheet.
Disadvantages:
* there is no formal { market } in which FRAs can be { traded }
* FRAs carry the { credit } { risk } of the counter party.

{ Basis (i) } is the historical difference between yields on the instrument in the physical market and that on the futures market at the same time of year.

{ Variation (i) } margins represent unrealised losses in the futures market and must be paid on a daily basis.
</quiz>

[[Interest Rate Markets Quiz 4]]

Interest Rate Markets Quiz 3 - Revision history

Egge at 10:42, 27 July 2008

Egge at 07:10, 27 July 2008

Egge: New page: { '''Treasury Notes''' |type="{}"} Treasury notes are issued with terms to maturity of { 5 }, { 13 } or { 26 } weeks. Tenders are lodge at { 12 ...