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T Bills

Treasury bills, or T-bills, are short-term debt securities issued by the United States Department of the Treasury to finance government spending. T-bills have maturities of less than one year and are sold at a discount to face value. Investors purchase T-bills and receive the full face value from the Treasury upon maturity. For example, an investor may buy a $1,000 T-bill for $990, earning a $10 profit when redeemed. T-bills provide stable, predictable returns and are considered highly liquid assets suitable for both individual and institutional investors.

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95 views1 page

T Bills

Treasury bills, or T-bills, are short-term debt securities issued by the United States Department of the Treasury to finance government spending. T-bills have maturities of less than one year and are sold at a discount to face value. Investors purchase T-bills and receive the full face value from the Treasury upon maturity. For example, an investor may buy a $1,000 T-bill for $990, earning a $10 profit when redeemed. T-bills provide stable, predictable returns and are considered highly liquid assets suitable for both individual and institutional investors.

Uploaded by

vinit_jaiswal
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd

Treasury Bills

Treasury bills, or T-bills, are sold in terms ranging from a few days to 52 weeks. Bills are typically sold at a discount from the par
amount (also called face value). For instance, you might pay $990 for a $1,000 bill. When the bill matures, you would be paid
$1,000. The difference between the purchase price and face value is interest. It is possible for a bill auction to result in a price
equal to par, which means that Treasury will issue and redeem the securities at par value.

You can buy bills from us in TreasuryDirect and Legacy Treasury Direct through non-competitive bidding. Effective April 2009,
TreasuryDirect permits accounts for both individuals and various types of entities including trusts, estates, corporations,
partnerships, etc. See Learn More about Entity Accounts for full information on the new registration types.

-Bill, is a type of security issued by the United States Treasury through the Bureau of Public Debt. Along with
an assortment of other securities, T-Bills are used to finance the United States Government by borrowing
money from citizens. Investors purchase T-Bills when they become available, and when they mature after a set
period of time, usually less than a year, the investors may redeem their T-Bills for the face value. The purchase
price of the T-Bill serves as a temporary loan to the United States Government, which returns it when the T-Bill
matures.

The smallest face value for a T-Bill is $1,000 US Dollars (USD). The T-Bill is sold at a discount, which is
determined by the Bureau of Public Debt, but the Treasury pays the full face value when it is redeemed. For
example, an investor might purchase a 90-day T-Bill for $900 USD, and earn a $100 USD return on the
investment when the T-Bill is redeemed. Unlike many other securities, a T-Bill does not bear interest, but the
return on a T-Bill is highly predictable and very stable, barring complete financial collapse of the United States
Treasury.

Investors may choose to include T-Bills in their profiles because they are highly stable investments with a pre-
set time to maturity and a dependable return. Unlike more risky investments, a T-Bill is unlikely to return a
substantial sum, but when they are traded on large volume, they can represent a substantial return. Investors
can potentially purchase millions of dollars worth of T-Bills, assuming that they possess the available capital.
They are also extremely liquid assets, making them a versatile and useful addition to a diverse investment
portfolio.

While private investors can and do purchase T-Bills, banks and other financial institutions are capable of
purchasing them on a much larger scale, and thus make up the bulk of the trade in T-Bills on the day of the
initial offering. Once purchased from the Treasury, a T-Bill can be sold or traded before it matures and is ready
to be redeemed, and many individuals purchase T-Bills on the secondary market, from banks and institutions
which purchased the bills from the Treasury. As compared with other Treasury securities, the T-Bill matures
much more quickly, creating a rapid turnover investment, as opposed to the Treasury Note, which matures in
two to 10 years, or Treasury Bonds, which take 10-30 years to mature.

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