Treasury Bond
Treasury bond is a negotiable debt instrument issued by the US government, with maturity from ten to thirty years and fixed interests payment.
Treasury bonds are issued in denominations larger than $1000 with semi annual interest payments. These bonds are sold only on primary market, trough a government auctions, which can be organized as competitive or non-competitive.
If the auction is competitive, maximum purchase amount is set at 35% of the offering, and the bid states which rate the buyer is willing to accept. The issuer will accept that rate if it compares well with the rate of the bond.
If the auction is non-competitive, maximum purchase amount is set at $5 million, and the purchaser is obligated to accept the rate set by the bond.
Like other Treasuries, Treasury bonds are backed by full faith and credit of the US government and are exempt from state and local taxes; however, federal taxes are due to earned interests.
Treasury bonds with maturity of thirty years are called "long bonds."
In general, Treasury bonds are called just T-Bonds.
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