Thursday, 8 December 2011
What is a T-Bill?
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