Money market securities issued by the
- Treasury bills (T-bills)
- Treasury and agency securities with remaining maturities of less than a year
- Federal National Mortgage Association (Fannie Mae) short-term discount notes
- Federal Home Loan Bank short-term discount notes and interest-bearing notes
- Federal Farm Credit Bank notes and bonds maturing in one year
- Short-term discount notes issued by other smaller agencies
We will discuss U.S. Government and Federal Agency Instruments further in a later section.
Municipal Government Instruments
Municipalities issue tax-exempt money market securities that include the following notes:
A short-term obligation in the form of a note, used for the funding of construction projects such as housing developments. In most cases, the note issuers will repay the note obligation by issuing a longer term bond and using the proceeds from the bond to pay back the note.
- This type of financing is most often seen at the municipal level: for example, a large city might use a construction loan note to finance a large housing project to meet the demands of its growing population.
- A short-term debt security issued on the premise that future revenues will be sufficient to meet repayment obligations.
- RANs are generally used to generate immediate investment capital to begin a large project. These securities are repaid with future expected revenues from the completed project, which may come from sources like turnpike tolls or stadium ticket sales.
- A short-term interest-bearing security issued in the anticipation of larger future bond issues.
- Bond anticipation notes are smaller short-term bonds issued by governments and corporations. Knowing that the proceeds of the larger future issue will cover the anticipation notes, the issuing bodies use the notes as short-term financing.
- Short-term debt securities issued in anticipation of future tax collections.
- TANs are generally issued by state and municipal governments to provide immediate funding for a capital expenditure, such as highway construction.
Corporation and Financial Institution Instruments
InvestingTreasury bills, notes and bonds are all marketable securities sold by the U.S. government to pay off debts and to raise cash.
InvestingA government bond is a debt security a government issues.
InvestingA 10-year Treasury note is an intermediate debt obligation issued by the United States government, and with a ten-year maturity date.
InvestingGovernment securities are debt instruments that governments issue to raise capital.
RetirementDiscover characteristics of money market and short-term bonds, including how the investments are alike and different, and the benefits and risks each offers.
InvestingSeveral factors affect the taxable interest that must be reported. Learn more here.
InvestingLearn the functions of the U.S. Treasury, and find out how and why it issues debt.
InvestingLearn to distinguish between general obligation and revenue bonds to ace this test.