Page 201: Find and describe at least two things to correct about Figure 7-5.

Figure 7-5 An examination of yield and maturity characteristics A. Short-Term Treasury Bills Yield percent 3 1 Time to maturity (months) B. Long-Term Government Securities Yield percent 10 Time to maturity (years) The Fed maintained a low interest rate environment throughout 2015 and indicated that rates would stay low for a while. In a press release from December 17, 2014, the Board of Governors said The Fed maintained a low interest rate environment throughout 2015 and indicated that rates would stay low for a while. In a press release from December 17, 2014, the Board of Governors said When die Committee decides to begin to remove policy accommodation, it will take a bal- anced approach consistent with its longer-nun goals of maimunt employment and inflation of 2 percent. The Committee currently anticipates that, cien after employment and inflation are near mandate.consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee vies as normal in the longer noe Note that interest rates for various securities had fallen significantly between 1980 and 2015. Table 7-1 may very well show the high and low of interest rates for the post-World War II period. Table 7-1 Types of short-term investments Yield Yield Yield Yield Yield Yield Minimum March 22, July 14, January 9, May 14, January 7, January 9, Maturity Amount Safety Marketability 1980 2000 2003 2010 2013 2015 Federal government securities: Treasury bills 3 months $100 Excellent Excellent 14.78% 6.06% 1.18% 0.16% 0.07% 0.03% Treasury bills 6 months $100 Excellent Excelent 13.85 1.24 0.23 0.11 0.09 Federal agency securities: Federal Home Loan Bank 1 year 5,000 Excellent Excele 14.40 6.78 1.40 0.25 0.53 0.43 Nongovernment securities: Certificates of deposit fargel 3 months 100,000 Good Good 16.97 6.65 1.29 0.38 0.23 0.27 Certificates of deposit (small 3 months 500 Good Poor 15.90 6.00 1.31 0.35 0.39 0.21 Commercial paper 3 months 25,000 Good Fair 17.40 6.50 1.28 0.21 0.17 0.17 Banker's acceptances 3 months None Good Good 17.22 6.51 1.31 0.35 0.28 0.23 Eurodollar deposit 3 months 25,000 Good Excelent 18.se 6.75 1.32 0.40 0.30 0.30 Savings accounts Open None Excellent None 5.25 3.00 1.25 0.40 0.30 0.06 Money market funds Open 500 Good None 14.50 6.00 0.96 0.72 0.51 0.40 Money market deposit accounts financial institutions) Open 1.000 Excellent None 5.50 1.20 0.57 0.51 0.08 Several of the above securities can be purchased with maturities longer than those indicated. The above are the most commonly quoted. "In 1980, investors could buy T-bills only in $10,000 amounts, but beginning August 10, 1998, this amount was lowered to $1,000 Though not marketable, these investments are still highly liquid in the funes may be withdrawn without penalty Sources: Various issues of The Wall Street Journal, Barons Magazine, anc Bank Rate Monitor, and the St. Louis Federal Reserve Bank Let us examine the characteristics of each security in Table 7-1. Treasury bills are short-term obligations of the federal government and are a popular place to "park funds" because of a large and active market. Although these securities are originally issued with maturities of 91 days and 182 days, the investor may buy an outstanding T-bill with as little as one dav remainino (nerhand two nrior investors have held it for 45 days each. Let us examine the characteristics of each security in Table 7-1. Treasury bills are short-term obligations of the federal government and are a popular place to "park funds" because of a large and active market. Although these securities are originally issued with maturities of 91 days and 182 days, the investor may buy an outstanding T-bill with as little as one day remaining (perhaps two prior investors have held it for 45 days each). With the government issuing new Treasury bills weekly, a wide range of choices is always available. Treasury bills are unique in that they trade on a discount basis- meaning the yield you receive occurs as a result of the difference between the price you pay and the maturity value. Federal agency securities represent the offerings of such governmental organiza- tions as the Federal Home Loan Bank and the Student Loan Marketing Association Though lacking the direct backing of the U.S. Treasury, they are guaranteed by the issuing agency and provide all the safety that one would normally require. There is Figure 7-5 An examination of yield and maturity characteristics A. Short-Term Treasury Bills Yield percent 3 1 Time to maturity (months) B. Long-Term Government Securities Yield percent 10 Time to maturity (years) The Fed maintained a low interest rate environment throughout 2015 and indicated that rates would stay low for a while. In a press release from December 17, 2014, the Board of Governors said The Fed maintained a low interest rate environment throughout 2015 and indicated that rates would stay low for a while. In a press release from December 17, 2014, the Board of Governors said When die Committee decides to begin to remove policy accommodation, it will take a bal- anced approach consistent with its longer-nun goals of maimunt employment and inflation of 2 percent. The Committee currently anticipates that, cien after employment and inflation are near mandate.consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee vies as normal in the longer noe Note that interest rates for various securities had fallen significantly between 1980 and 2015. Table 7-1 may very well show the high and low of interest rates for the post-World War II period. Table 7-1 Types of short-term investments Yield Yield Yield Yield Yield Yield Minimum March 22, July 14, January 9, May 14, January 7, January 9, Maturity Amount Safety Marketability 1980 2000 2003 2010 2013 2015 Federal government securities: Treasury bills 3 months $100 Excellent Excellent 14.78% 6.06% 1.18% 0.16% 0.07% 0.03% Treasury bills 6 months $100 Excellent Excelent 13.85 1.24 0.23 0.11 0.09 Federal agency securities: Federal Home Loan Bank 1 year 5,000 Excellent Excele 14.40 6.78 1.40 0.25 0.53 0.43 Nongovernment securities: Certificates of deposit fargel 3 months 100,000 Good Good 16.97 6.65 1.29 0.38 0.23 0.27 Certificates of deposit (small 3 months 500 Good Poor 15.90 6.00 1.31 0.35 0.39 0.21 Commercial paper 3 months 25,000 Good Fair 17.40 6.50 1.28 0.21 0.17 0.17 Banker's acceptances 3 months None Good Good 17.22 6.51 1.31 0.35 0.28 0.23 Eurodollar deposit 3 months 25,000 Good Excelent 18.se 6.75 1.32 0.40 0.30 0.30 Savings accounts Open None Excellent None 5.25 3.00 1.25 0.40 0.30 0.06 Money market funds Open 500 Good None 14.50 6.00 0.96 0.72 0.51 0.40 Money market deposit accounts financial institutions) Open 1.000 Excellent None 5.50 1.20 0.57 0.51 0.08 Several of the above securities can be purchased with maturities longer than those indicated. The above are the most commonly quoted. "In 1980, investors could buy T-bills only in $10,000 amounts, but beginning August 10, 1998, this amount was lowered to $1,000 Though not marketable, these investments are still highly liquid in the funes may be withdrawn without penalty Sources: Various issues of The Wall Street Journal, Barons Magazine, anc Bank Rate Monitor, and the St. Louis Federal Reserve Bank Let us examine the characteristics of each security in Table 7-1. Treasury bills are short-term obligations of the federal government and are a popular place to "park funds" because of a large and active market. Although these securities are originally issued with maturities of 91 days and 182 days, the investor may buy an outstanding T-bill with as little as one dav remainino (nerhand two nrior investors have held it for 45 days each. Let us examine the characteristics of each security in Table 7-1. Treasury bills are short-term obligations of the federal government and are a popular place to "park funds" because of a large and active market. Although these securities are originally issued with maturities of 91 days and 182 days, the investor may buy an outstanding T-bill with as little as one day remaining (perhaps two prior investors have held it for 45 days each). With the government issuing new Treasury bills weekly, a wide range of choices is always available. Treasury bills are unique in that they trade on a discount basis- meaning the yield you receive occurs as a result of the difference between the price you pay and the maturity value. Federal agency securities represent the offerings of such governmental organiza- tions as the Federal Home Loan Bank and the Student Loan Marketing Association Though lacking the direct backing of the U.S. Treasury, they are guaranteed by the issuing agency and provide all the safety that one would normally require. There is