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What is a T-Bill?

Treasury Bills are what the US government uses to borrow money. A T-Bill has always been seen as one of the safest forms of investment because it offers a guaranteed return - barring the complete collapse of the world financial system!

WiseGeek  explains how it works:

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.

 T-Bonds have come to the fore recently as the US Treasury struggles to manage the financial crisis - see here



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