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Repurchase agreements have grown into a very large portion of the money markets, fueling the growth of short-term markets for mutual funds in trading government-backed securities, such as T-bills. Indeed, the Treasury, through its Federal Reserve bank banking system, is a large purchaser of repos, providing important liquidity for short-term ...
The US government defines government money market funds as “funds that invest 99.5% or more of their total assets in liquid investments (e.g. cash, government securities, repurchase agreements fully collateralized with government securities).” Such funds include US Treasuries and
Financial instruments traded on the money market include certificates of deposit, Treasury bills, commercial paper, municipal notes, short-term asset-backed securities, Eurodollar deposits, and repurchase agreements. Because these investments have shorter-terms they are often classified as cash equivalents.
The rules also applies to a taxpayer 's spouse, meaning that a loss-generating sale by one and subsequent purchase by the other may be considered a wash sale, as may agreements among friends to repurchase securities from each other when the wash sale period ends. Further, the IRS does not require that the same number of similar securities be ...
Anti-greenmail provisions are attempts to thwart takeover threats from speculators, disruptive shareholders, and other 'unsavory' entities that are seeking a payoff rather than a genuine business relationship. In general, a corporation's shareholders must vote to adopt or abandon anti-greenmail provisions. Greenmail is an acquisition tactic ...
An indenture agreement is the formal contract between a bond issuer and the bondholders. It sets forth the details of all the terms and conditions of the bonds, such as the exact day of their maturity, the timing of the interest payments and how they are calculated, and the details of any special features. How Does a Bond Indenture Work ...
Commercial paper is issued by a wide variety of domestic and foreign firms, including financial companies, banks, and industrial firms. Major investors in commercial paper include money market mutual funds and commercial bank trust departments. These large institutional investors often prefer the cost savings inherent in using commercial paper ...
In general, sinking funds benefit investors in three ways. First, the redemptions leave less principal outstanding, making final repayment more likely and thus lowering default risk. Second, if interest rates increase, thereby lowering bond prices, investors get some downside protection because the provision forces the issuer to redeem at least ...
Other examples of off-balance-sheet financing include the sale of receivables under certain conditions, guarantees or letters of credit, joint ventures, or research and development activities. Often, companies set up special-purpose vehicles (SPVs) or special-purpose entities (SPEs) that have their own balance sheets, and companies then place ...
The shadow banking system (or shadow financial system) is a network of financial institutions comprised of non-depository banks -- e.g., investment banks, structured investment vehicles (SIVs), conduits, hedge funds, non-bank financial institutions and money market funds.