What is a T-Bill?
Video Transcript What Is a T-Bill? Hello, my name is Arielle Reid in Budapest, Hungary. And I will be answering today, “What is a T-Bill?” Now, a T-Bill, or also know as a treasury bill, is security sold by the U.S. government. Now these investments are generally considered risk free, because they’re backed by the credit of the government itself. The securities have varying maturity dates, and if you can see, they reach maturity between four, three, twenty-six, and fifty-two weeks. Returns on the investments after four weeks, thirteen weeks, twenty-six weeks or fifty-two weeks, are only delivered to the investor when the bill matures. Now, T-Bills are bought below their original value, and that’s important to know because you can negotiate the rate at which you want to buy the bill. You can either opt for picking the rate set by the Treasury, or you can bid for your own bill. And that is how returns on a T-Bill are delivered to the investor.
A Treasury Bill, often abbreviated as T-Bill, is a type of security issued by the United States Treasury through the Bureau of Public Debt. Along with an assortment of other securities, T-Bills are used to finance the United States Government by borrowing money from citizens. Investors purchase T-Bills when they become available, and when they mature after a set period of time, usually less than a year, the investors may redeem their T-Bills for the face value. The purchase price of the T-Bill serves as a temporary loan to the United States Government, which returns it when the T-Bill matures. The smallest face value for a T-Bill is $1,000 US Dollars (USD). The T-Bill is sold at a discount, which is determined by the Bureau of Public Debt, but the Treasury pays the full face value when it is redeemed. For example, an investor might purchase a 90-day T-Bill for $900 USD, and earn a $100 USD return on the investment when the T-Bill is redeemed. Unlike many other securities, a T-Bill does
A T-Bill is a debt obligation that is backed by the United States government. These are designed to finance national debt. When an individual makes this type of investment, they’re essentially purchasing stock in the US government. The T-Bill is purchased at a price lower then the stated value, and investors can choose from a variety of terms; from 28 days to a year. The longer the term, the more money you’ll earn on the investment.
