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TREASURY BILLS |
TREASURY BOND |
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Treasury bills are government debts issued to
investors that mature in one year or less. T-Bills don't pay interest before
maturity |
Government bonds are also government debts issued
to investors that can mature anywhere from one year to 30. Most government
bonds pay interest either annually or semi-annually. |
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Bills
are usually short term. |
Bonds
are usually 5, 10, 15, or more years. |
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the
money invested can earn as much
interest |
the
money invested cannot earn as much interest as it should have if invested
somewhere else. |
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T-Bills
pay interest after maturity |
T-Bonds
pay interest every six months. |
Treasury bills are short-term obligations
issued with maturities of less than one year. They are sold at a discount from
the face value and without coupon payment. The difference between the purchase
price of the bill and the face value that is paid to the buyer at maturity can
be considered as interest on the bill. Treasury bills are usually issued with
maturities of 91 days, 182 days, 273 days, and 364 days.
Central government bonds are long-term obligations issued with maturities of
more than one year. They are issued with a stated rate of interest to be paid
annually, and are redeemed at par at maturity. Central government bonds are
issued with maturities of 2, 5, 10, and 20 years.