Question: What are Treasury Bills, Notes and Bonds?
Answer: Treasury bills, notes and bonds are sold by the U.S. Treasury Department. These are the safest investments in the world, since they are backed by the U.S. Government. For this reason, they tend to have the lowest interest rates.
Treasury bills, notes and bonds are sold at auction and can be bought for more or less than the face value, depending on demand. They can also be resold on the open market, and the price can fluctuate further. The interest rate is paid every six months, and does not change throughout the term of the product. If you hold onto them until term, you will get face value plus interest, no matter what you paid for them at auction. However, the minimum investment amount is $10,000, placing them out of reach for many individual investors.
The difference between bills, notes and bonds are the length until maturity:
- Treasury bills are issued for terms less than a year.
- Treasury notes are issued in terms of 2, 3, 5, and 10 years.
- Treasury bonds are issued in terms of 30 years, and have just recently been reintroduced in February 2006.
What Are the Different Types of Bonds?
- What Are Treasury Bills, Notes and Bonds?
- What Are Savings Bonds?
- What Are I Bonds?
- What Are Municipal Bonds?
- What Are Corporate Bonds?
- What Are Junk Bonds?
