UD/ISCTE-IUL Trading and Bloomberg Program

1. Which of the following is not a U.S. Treasury security?

Treasury bill (T-bill) Treasury note (T-note) Municipal bond Treasury Inflation-Protected Security (TIPS) Check Answer

2. Which statement about Treasury bills (T-bills) is correct?

They are short-term securities (4 to 52 weeks) issued at a discount and pay no coupons before maturity. They have maturities of 10 to 30 years and pay coupons every six months. They are only issued with a 2-year maturity and pay interest quarterly. They are inflation-linked bonds whose principal is adjusted by CPI. Check Answer

3. What is a key difference between a Treasury bill and a Treasury note?

Treasury bills pay semiannual coupons; Treasury notes do not pay any coupons. Treasury bills are short-term zero-coupon securities, whereas Treasury notes are 2–10 year coupon securities with semiannual interest. Treasury bills are only available to institutional investors; Treasury notes are only for retail investors. There is no difference; they are just alternative names for the same instrument. Check Answer

4. Which statement about Treasury bonds (T-bonds) is correct?

Treasury bonds have maturities of 1 year or less. Treasury currently issues new 15-year Treasury bonds. Treasury bonds are long-term securities with maturities of 20 and 30 years and pay coupons every six months. Treasury bonds have floating coupons linked to the 13-week T-bill rate. Check Answer

5. Which of the following best describes a Treasury Floating Rate Note (FRN)?

A 30-year fixed-rate bond with coupons paid annually. A 10-year note whose coupon is fixed at issuance and never changes. A short-term bill issued at a discount and paying no coupons. A 2-year security whose coupon is reset quarterly based on the 13-week Treasury bill rate. Check Answer

6. What is the key feature of Treasury Inflation-Protected Securities (TIPS)?

They have maturities only up to one year. Both the principal and coupon payments are adjusted for inflation, helping protect investors’ real returns. They are backed by municipal governments rather than the U.S. Treasury. They pay coupons monthly instead of semiannually. Check Answer

7. What are Treasury STRIPS?

Zero-coupon securities created by separating the coupon and principal payments of Treasury notes and bonds. Short-term floating-rate notes issued only by the private sector. A special type of T-bill issued directly by the Federal Reserve. Securities that combine corporate and Treasury cash flows into a single bond. Check Answer

8. How are Treasury securities sold in the primary market?

Through continuous trading on stock exchanges. Via negotiated sales with a single underwriter. Through sealed-bid auctions conducted by the U.S. Treasury Department. Only via private placements with foreign central banks. Check Answer

9. Which statement about noncompetitive bids in Treasury auctions is correct?

A noncompetitive bidder specifies both the yield and the quantity they want. A noncompetitive bidder specifies only the quantity (up to a limit of \$5 million) and accepts the yield determined by the auction. Noncompetitive bids are only allowed for foreign central banks. Noncompetitive bids always receive a higher yield than competitive bids. Check Answer

10. In a Treasury auction, what is the “stop-out yield” (or “high yield”)?

The lowest yield submitted in any competitive bid. The average yield of all noncompetitive bids. The yield paid only to primary dealers. The highest yield accepted by the Treasury that allows the full offering amount to be sold. Check Answer