Treasury Bill (T-bill)
What Is a Treasury Bill (T-Bill)?
A Treasury bill (T-bill) is a short-term debt security issued by the U.S. government with maturities ranging from a few weeks to one year. Unlike many other bonds, Treasury bills do not pay periodic interest.
Instead, they are sold at a discount to their face value, and investors earn profit when the bill matures at full value.
Why It Matters
Treasury bills are widely considered one of the lowest-risk investments available. Because of their short maturity and government backing, they are often used by investors looking to preserve capital while earning modest returns.
T-bills also serve as a benchmark for short-term interest rates.
How Treasury Bills Work
Treasury bills are issued with maturities such as:
- 4 weeks
- 8 weeks
- 13 weeks
- 26 weeks
- 52 weeks
Investors purchase T-bills at a discounted price and receive the full face value at maturity.
Example
An investor buys a $1,000 Treasury bill for $970. When the bill matures, the investor receives $1,000.
Treasury Bill vs Treasury Bond
- Treasury bills are short-term investments and do not pay periodic interest.
- Treasury bonds are long-term investments that pay regular interest payments.
FAQs About Treasury Bills
Do Treasury bills pay interest?
No. Investors earn returns from the difference between purchase price and face value.
Are Treasury bills safe investments?
They are backed by the U.S. government and considered very low risk.
Who invests in Treasury bills?
Individual investors, banks, institutions, and governments often purchase them.
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