What are Treasury Bills (T-Bills)?
Let's find out Treasury Bills (T-Bills) meaning, definition in crypto, what are Treasury Bills (T-Bills), and all other detailed facts.
Treasury bills (T-Bills) are short-term debt obligations that are issued by the US government and backed by the Treasury Department. T-Bills typically have a maturity of no more than a year and are sold in denominations of $1000.
In non-competitive bids, the maximum denomination of a T-Bill can go up to $5 million. This makes treasury bills a low-risk investment. Treasury bills can be issued for public projects, like infrastructure. Investors purchasing treasury bills are issued IOU letters by the US government, reinforcing their status as safe security.
T-Bills are short-term obligations, as their maturity can range between a few days and 52 weeks. The longer the maturity date is, the more interest rate has to be paid. Although T-Bills are typically held until they reach their maturity date, some investors may take them out before the deadline and resell them via a secondary market to increase their gains.
The US government issues treasury bills at a discount rate from the actual face value of the bill. As the bill matures, the investor is paid the face value of the purchased bill. If the face value exceeds the purchase price, the investor earns the difference as interest.
Although treasury bills don’t issue regular interest payments, the interest is instead reflected on the amount paid when the bill matures.