Treasury Bonds Bills | Treasury Bill Definition | What are Treasury Bonds Bills?

Treasury Bonds Bills

Treasury Bonds Bills | Definition

Short-term direct obligations of the US Government, usually issued with maturities of three months, six months, or one year. Also known as T-bills or Treasuries.

Because of their safety and liquidity, Treasury bills are often used as risk-free proxies in portfolio analysis.

Since T-bills are offered only in bearer form, they cannot be registered in any legal name. They are issued in amounts of $10,000 and up, in multiples of $5,000.

Treasury bills do not have a stated interest rate. The interest is calculated by taking the difference between the discount price, date of purchase, and the face amount (par) collected at maturity. The yield is figured on a 360-day basis, versus 365 days for interest-bearing securities, using the actual number of days remaining in the life of the issue. A conversion table is used to make this calculation.

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