Treasury Bill
Treasury bill is a negotiable short-term debt obligation issued by the US government, with maturity equal to or less than one year. Treasury bills usually have interest payments at 1 month, 3 months or 6 months, and are sold in denominations of $1000.
Unlike common bonds, Treasury bills do not pay interest trough time, but provide bond appreciation to the holder. It means that the holder would receive appreciated amount at the date of maturity.
Since Treasury Bills are backed by fill faith and credit of US government, they are considered very safe investments and offer lower return when compared to conventional investment vehicles. In addition, Treasury bills are exempt of state and local taxes; however, federal taxes are due on the earned interest.
Treasury bills are also called T-Bills.
| Related Terms: Repo Short-Term Investment Fund-STIF Variable Rate Security |