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United States treasury bills - Essay Example

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Governments need money to finance their operations and to keep running their working machinery, whenever they feel themselves short of money; they make an arrangement to raise some amount from the private sector, treasury bills are issued to the investors, which are short term usually for a period less than one year. These bills bear a fixed rate of return on the terms of the bill and are to get mature within the time span of less than one year. Treasury bills can be defined in the following way:A negotiable debt obligation issued by theU.S. government and backed by its full faith and credit, having maturity of one year or less. U.S. TreasuryBills are exempt from state and local taxes. These securities do not pay coupon rate of interest, and the interest earned is estimated by taking the difference between the price paid and the par value of the bond, and calculating that rate of return on an annual basis. TreasuryBills are considered the safest securities available to the U.S.investor, and so the yields on these securities are considered the risk-free Teo return. These are also calledBillorT-BillorTreasury bill.This definition describes the true meaning of the treasury bills issued by the Unites States government. Treasury bills are the most trusted and respectable bills among the investors because these are backed up by the government itself. Investors have full confidence that their investment is safe and that they are going to get the fixed amount as a return on the investment.

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Summary

Governments need money to finance their operations and to keep running their working machinery,whenever they feel themselves short of money;they make an arrangement to raise some amount from the private sector,treasury bills are issued to the investors,which are short term usually for a period less than one year…
United States treasury bills
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