Us Gov

U.S. Government & Agency Securities ## Treasury Bills (T-Bills) Treasury Bills are short-term debt obligations issued by the U.S. federal government. They are zero-coupon instruments — meaning they pay no periodic interest. Instead, they are sold at a discount to their $10,000 face value, and the investor receives the full face value at maturity. The difference between the purchase price and the face value is the investor's return. Maturities available: 4-week, 8-week, 13-week, 17-week, 26-week, and 52-week. Real-world example: An investor buys a 26-week T-Bill for $9,800. At maturity, the government pays $10,000. The $200 difference is the investor's earnings. The discount yield is calculated as: ($200 / $10,000) x (360 / 182 days) = approximately 3.96%. Note that T-Bills are quoted on a bank discount yield basis, which uses 360 days and par value (not purchase price) in the denominator — making the quoted yield slightly lower than the actual return earned. T-Bills are considered the risk-free rate benchmark in finance because they are backed by the full faith and credit of the U.S. government and have virtually zero default risk. --- ## Treasury Notes and Treasury Bonds Treasury Notes have maturities of 2 to 10 years and pay semiannual coupon interest. They are issued in denominations as low as $100 and are quoted as a percentage of par plus thirty-seconds (e.g., 99-16 means 99 and 16/32 percent of par). Treasury Bonds have maturities of 20 or 30 years and also pay semiannual coupon interest. They are otherwise structurally similar to T-Notes. The long duration makes them highly sensitive to interest rate changes — a small rise in rates causes a large drop in price. Analogy: A 30-year…