Treasury Bills (T-Bills)

Treasury bills (T-Bills) are short-term debt securities issued by the U.S. Department of the Treasury with maturities ranging from a few days to one year. T-Bills are sold at a discount to their face value, and investors receive the full face value at maturity. The difference between the purchase price and the face value represents the investor’s return. T-Bills are considered low-risk investments because they are backed by the U.S. government.

Example

An investor buys a $10,000 T-Bill for $9,800. At maturity, the investor receives $10,000, earning $200 as the return on the investment.