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Treasury bills t bills

Treasury Bills (T-Bills)

Treasury bills (T-Bills) are short-term debt securities issued by the U.S. Department of the Treasury with maturities ranging from a few days to one year. T-Bills are sold at a discount to their face value, and investors receive the full face value at maturity. The difference between the purchase price and the face value represents the investor’s return. T-Bills are considered low-risk investments because they are backed by the U.S. government.

Example

An investor buys a $10,000 T-Bill for $9,800. At maturity, the investor receives $10,000, earning $200 as the return on the investment.

Key points

• Short-term debt securities issued by the U.S. government.

• Sold at a discount to face value, with the difference being the return.

• Low-risk investments backed by the U.S. Treasury.

Quick Answers to Curious Questions

Why are Treasury bills considered low-risk investments?

They are backed by the full faith and credit of the U.S. government, making them one of the safest investment options.

How do investors make money from T-Bills?

Investors earn the difference between the purchase price (discount) and the face value received at maturity.

What is the typical maturity range for Treasury bills?

T-Bills have maturities ranging from a few days up to one year, with the most common maturities being 4, 13, 26, and 52 weeks.

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