Is there a quick/easy way to remember all the denominations most securities discussed in S7 are issued in. It’s difficult to remember as they range from as they are all over the place - $100, $1000 …some are even used in $25000. If someone can post a brief summary, that will be very helpful. Thanks!
Hi @Gautam! Denominations typically relate to fixed income securities and oftentimes is a synonym for the par (face) value. In the real world, denominations of all sorts exist, sometimes as low as $25 and as high as $1 million or more. The exam simplifies this concept for most securities. Here’s what I recommend you know for test purposes:
- Debt securities = $1,000 denominations
- Exceptions:
- Treasury securities = $100 minimum denominations, although $1,000 is the standard
- Pass-through certificates = $25,000 typical denominations
- Commercial paper = $100,000 minimum denominations
- Jumbo (negotiable) CDs = $100,000 minimum denominations
- Exceptions:
- Preferred stock = $100 denominations unless otherwise stated
- Questions may specifically refer to $25, $30, or $50 denominations
The generalities are most likely to be tested, but some questions may focus on the exception. I hope this helps!
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This is great. Thanks, Brandon!
Can you also summarize the quote styles for different bond securities like which ones are quoted in 1/8th, 1/32 and so on? Thanks again!
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Yep!
- Corporate = 1/8ths
- US government = 32nds
- Notable exceptions:
- Treasury bills = discount yield quotes (e.g., T-bill quoted at a 3.00% yield)
- Municipal bond quote structures vary
- Muni “dollar” bonds (usually revenue bonds) = 1/8ths
- Most G.O. bonds = yield quotes (e.g., muni bond quoted at 7.50% yield)
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