Welcome to the Investors Trading Academy talking
glossary of financial terms and events.
Our word of the day is “Treasury Securities”
These U.S. government-issued debt securities
are divided into three categories by maturity
dates: Treasury bonds mature in 10 or more
years, Treasury notes mature between one and
10 years and Treasury bills mature in one
year or less.
These debt obligations are considered the
safest option for bond investors since they
are backed by the full faith and credit of
the U.S. government.
But that safety comes at a price: The interest
rates on Treasury’s are lower than other
bonds with the same duration.
Treasury securities are divided into three
categories according to their lengths of maturities.
These three types of bonds share many common
characteristics, but also have some key differences.
The categories and key features of treasury
securities include:
T-Bills – These have the shortest range
of maturities of all government bonds at 4,
13, 26 and 52 weeks.
They are the only type of treasury security
found in both the capital and money markets,
as three of the maturity terms fall under
the 270-day dividing line between them.
T-Bills are issued at a discount and mature
at par value, with the difference between
the purchase and sale prices constituting
the interest paid on the bill.
T-Notes – These notes represent the middle
range of maturities in the treasury family,
with maturity terms of 2, 3, 5, 7 and 10 years
currently available.
Treasury notes are issued at a $1,000 par
value and mature at the same price.
They pay interest semiannually.
T-Bonds – Commonly referred to in the investment
community as the “long bond”, T-Bonds
are essentially identical to T-Notes except
that they mature in 30 years.
T-Bonds are also issued at and mature at a
$1,000 par value and pay interest semiannually.
