Question

Discuss the Treasury bond market and explain its contribution to the flow of funds and price discovery functions.

Answer 1

a treasury bond is government debt securities, there is an involvement of government in this bond.it is i9ssued by the federal government. Treasury bonds usually have maturities greater than 10 years.it earns periodic interest until maturity.

the owner is paid a paramount equal to the principal. a treasury bond is actually a large part of U.s sovereign debt known collectively as treasuries.

comparing to other bind this is having=g less risk .and know as risk -free securities. the involvement of the federal government makes this risk free.

in the fixed income market, treasury bond yields help to form the yield curve,which includes the full range of investment offered by the U.S government.there is also a active secondary market for treasury bonds,making the investment highly liquid .cuerrent auction and yield rates of treasury bonds dictates their pricing levels o the secondary market.