1. Financial Market Theory
Thursday, September 13, 2018
Professor Edwin T Burton

2. Class Was Cancelled for Tuesday, September 11

3. Outstanding US Treasury Debt (as of 7/31/18)
Total $ 21.3 Trillion
Funded Debt $ 15.6 Trillion
Other $ 5.7 Trillion
Marketable (Funded) Debt Held by the Public $ Trillion
Bills $ 2.2 Trillion
Notes $ 9.09 Trillion
Bonds $ 2.1Trillion
Other $ 1.7 Trillion
September 13, 2018

4. Treasury Bills Less Than One Year in Maturity Quoted at a “discount”
Use 360 day year
No payments until maturity
Name: Date of Maturity
We will assume $ 1 million in principal
September 13, 2018

5. Notes and Bonds
We assume $ 100,000 in principal amount paid at maturity
Pay two “coupons” each year – six months apart
Name is a combination of fixed coupon payment and maturity date (assume 15th of the month)
Example: the 4’s of Oct ‘27
This ten year note” pays $ 2,000 every April 15th and October 15th
Pays last coupon on October 15th, 2027 as well as $ 100,000 in principal…..total of $ 102,000 on oct 15th, 2027
Example 6 1/4s of Jan ‘47
This 30 year bond pays $ 3,125 every Jan 15th and July 15th
Pays last coupon of $ 3,125 and principal payment of $ 100,000 on Jan 15th, 2047.
September 13, 2018