What are Treasury bills, notes, bonds, and TIPS?
Treasury bills, notes, bonds, and TIPS are marketable securities the U.S. government sells in order to pay off maturing debt and raise the cash needed to run the federal government. When you buy one of these securities, you are lending your money to the U.S. government. What distinguishes bills, notes, bonds, and TIPS from one another? Treasury bills are issued in terms of one year or less. Treasury bills are sold at a discount from face value and don’t pay interest before maturity. The interest is the difference between the purchase price of the bill and the amount that is paid to you either at maturity (this amount is the face value) or when you sell the bill prior to maturity. Treasury notes and bonds bear a stated interest rate, and the owner receives semi-annual interest payments. Treasury notes have a term of more than one year, but not more than 10 years. Treasury bonds have terms of more than 10 years. TIPS, or Treasury Inflation-Protected Securities, are securities whose princ
