U.S. Government and Federal Agency Instruments
Money market securities issued by the U.S. government and its agencies include the following vehicles:

  • 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.

  • Revenue anticipation notes (RANs)
    • 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.

  • Bond anticipation notes (BANs)
    • 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.

  • Tax anticipation notes (TANs)
    • 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

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