文档介绍：: .
he lowest possible
transactions cost.
4. Informational or external efficiency, which means prices rapidly
adjust to new information so that the prevailing market price reflects
all available information regarding the asset.
4LOS b: Distinguish between competitive
bids, negotiated sales, and private
placements for issuing bonds
• Government bond issues are sold at public auction by the
Federal Reserve.
• Small purchasers can submit noncompetitive bids where
they are guaranteed securities at the average of the
accepted competitive bids.
• Government securities include: bills 1 to 12 months; notes 2
to 10 years, and bonds 10 years and up.
5LOS b: Distinguish between competitive
bids, negotiated sales, and private
placements for issuing bonds
• Municipal bond issues are brought to market by a local government
unit through:
– Competitive bidding with the underwriter. This means the
underwriter will help originate the issue, bear the price risk, and
sell the securities for a competitively determined fee.
– A negotiated underwriting. Here the underwriter helps originate
the issue, bear the price risk, and distribute the issue for a
negotiated fee.
– A private placement where the governmental unit sells the issue
directly to the investor without the help of an underwriter.
6LOS c: the secondary markets for .
government/municpal bonds with the
corporate bonds.
• secondary market for treasuries is through the 35 major
treasury dealers. Agency securities and municipal bonds
are traded through the major banks and investment
fir