Corporate Bonds

Archive for the ‘Discount Notes’ Category

Federal Agency Discount Notes

Similar to Treasury Bills, Agency Discount Notes are issued by Federal Agencies at a discount to their maturity value (hence they are called discount notes). Discount notes are sometimes called Federal Agency Discount Notes.

What is an agency discount note?

An agency discount note is a short term investment alternative, typically available on a daily basis, through several different dealer firms. An Agency discount note has maturities ranging from overnight to 360 days.

Typically, Agency Discount Notes provide investors with:

• Yield advantage over Treasuries
• High credit quality
• Wide variety of short-term maturities
• State and local tax-exempt interest (in some cases)
• High degree of liquidity

To help you understand Federal Agency securities and Agency Discount Notes in particular, we've compiled investors' top questions:

• Agency Notes - FAQs
• Agency Notes
• Floating Rate Notes
• Benefits of Floating Rate Notes
• Who Invests in Floaters?
• Risks of Floating Rate Notes

Question: How do you Translating Words into Equations?

6. An automobile dealer has $750,000 worth of inventory in luxury cars and midsize cars. The profit
on a luxury car is 32% and the profit on a midsize car is 22%. The profit for the entire stock is
$195,000. How much inventory (in dollars) does the dealer have in each type of car? (Note: You are
not asked how many of each type of car he has.)

7. A total of $20,000 is invested in two Corporate Bonds, Bond A and Bond B. Bond A earns 5.5%
simple interest while Bond B earns 7.5% simple interest. The investor wants an annual interest income
of $1250 from these investments. How much should she invest in each bond?

When I multiply my first lucky number by 5 and my second lucky number by 7, the results produce a
sum of 123. When I add twice my first lucky number to my second lucky number, the sum is 21.
What are my lucky numbers?

Answer: Hi,

6. An automobile dealer has $750,000 worth of inventory in luxury cars and midsize cars. The profit on a luxury car is 32% and the profit on a midsize car is 22%. The profit for the entire stock is $195,000. How much inventory (in dollars) does the dealer have in each type of car? (Note: You are not asked how many of each type of car he has.)

L + M = 750000
.32L + .22M = 195000

-.22(L + M = 750000)
.32L + .22M = 195000

-.22L - .22M = -165000
.32L + .22M = 195000
---------------------------------
.1L = 30000
L = 300,000 <=luxury cars are worth $300,000
M = 450,000 <=midsize cars are worth $450,000

7. A total of $20,000 is invested in two Corporate Bonds, Bond A and Bond B. Bond A earns 5.5% simple interest while Bond B earns 7.5% simple interest. The investor wants an annual interest income of $1250 from these investments. How much should she invest in each bond?

A + B = 20,000
.055A + .075B = 1,250

-.055(A + B = 20,000)
.055A + .075B = 1,250

-.055A - .055B = -1100
.055A + .075B = 1,250
----------------------------------
.02B = 150
B = 7,500
She needs to invest at least $7,500 in Bond B in order to earn a minimum of $1250 interest. This means that $12,500 can be invested in Bond A.

When I multiply my first lucky number by 5 and my second lucky number by 7, the results produce a sum of 123. When I add twice my first lucky number to my second lucky number, the sum is 21.
What are my lucky numbers?

5x + 7y = 123
2x + y = 21

5x + 7y = 123
-7(2x + y = 21)

5x + 7y = 123
-14x - 7y = -147
------------------------
-9x = -24
x = 8/3

If x = 8/3 and 2x + y = 21, then:

2(8/3) + y = 21

16/3 + y = 21

16 + 3y = 63

3y = 47

y = 47/3

Your lucky numbers are 8/3 and 47/3, which are an unusual choice.
That shows your true individuality.

I hope that helps!!

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