1 Answer | Add Yours
Treasury bills (also known as T-bills) are a US government security. They are sold by the government as a way of financing government debt. They are also bought and sold by the government as a tool of monetary policy.
Treasury bills are a guarantee that the government will pay the holder $1000 on a given date. The bills are sold with maturity dates that can be 4 weeks, 13 weeks, 26 weeks, or 52 weeks in the future. In other words, this is very short term debt. The bills are put up for auction. Buyers pay a price that is lower than $1000. When the T-bill matures, they get the $1000. This means that they will want to purchase the bond for the lowest price possible. The return on their investment is whatever the difference is between $1000 and the price they pay for the T-bill.
We’ve answered 319,622 questions. We can answer yours, too.Ask a question