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
MarketsTreasury bills, notes and bonds are all marketable securities sold by the U.S. government to pay off debts and to raise cash.
MarketsA government bond is a debt security a government issues.
MarketsA 10-year Treasury note is an intermediate debt obligation issued by the United States government, and with a ten-year maturity date.
MarketsGovernment securities are debt instruments that governments issue to raise capital.
MarketsTreasuries are considered the safest investments, but they should still be analyzed when issued.
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ETFs & Mutual FundsLearn about individual municipal securities and municipal bond funds, whose principal stability and tax-free yield appeal to high-income investors.