U. S. GOVERNMENT SECURITIES

The U.S. Government issues its own securities from the U.S. Treasury and several government agencies. U.S. Government securities are very popular with investors worldwide. They offer fixed interest rates and have durations comparable to corporate bonds. These securities are considered by many to be the safest of all because of the creditworthiness of the U.S. Government.

The Treasury also issues Treasury notes and Treasury bills. It sells its securities at regular auctions or from banks or brokerage firms. The income these securities earn is subject to federal taxes, but not state taxes.

Government bonds are quoted on $100 even though their face value (par) may be $1,000. Fractions are given in 32nds. The fraction appears after the decimal point in the quotation. For example, a bond quoted at 88.8 would have a price of $882.50 ($880 + 8/32 of $10).

Government securities exist in two broad forms.

Marketable securities can be traded on the secondary market through exchanges or over the counter. Non-marketable securities can be redeemed only back to the government.

Let us look at both these types, beginning with the marketable securities.