What is a Treasury Bill?
A treasury bill, or t-bill, is a short term investment with maturity dates ranging from four to 52 weeks. These investments are often considered quite safe because they are backed by the United States government. A treasury bill differs from other types of investments in that they do not pay interest in the traditional way. When an investor wishes to purchase a treasury bill, they buy buy it at a discount rate. The amount paid for the treasury bill varies, and is decided by a bidding process. Once the treasury bill is purchased, the owner does not receive any money until the t-bill matures at which time he or she will receive the face value of the t-bill. This difference, the discount rate and the face value rate, is said to be the “interest” of a t-bill. Another benefit of the t-bill, is that when you purchase one, you know exactly how much you will earn over the life of the investment. For example, if the investor buys a treasury bill with a face value of $10,000 USD (US Dollars), fo
U.S. Treasury Bills (T-Bills, Bills) are a type of short-term marketable security of one year or less, typically sold at a discount. Treasury calculates auction results to the sixth decimal place. In determining the particular dollar amount an investor will pay, Treasury rounds to the nearest penny using conventional mathematical rounding methods. It is possible for a bill auction to result in a price equal to par, which means that Treasury will issue and redeem the securities at par value. Minimum purchase is $100 with multiples sold in the same increment. The maximum amount for a noncompetitive purchase is $5 million in a single auction.
