Treasury Bills are short term Government securities. Their maturities are 1 month, 3 month and 6 months. They are backed by the US Government, thus they carry no credit risk.
T Bills do not pay interest. They are 0 coupon securities. The investor will buy the treasury Bills at a discount price and then mature at a par value amount. The yield is calculated based on the discount price, the par and the time frame (30, 90 or 180).
These securities are auctioned weekly and bidded on by US Government securities dealers.
T Bills are extremely liquid securities and are used by institutional and foreign investors around the world. They trade very thin but the market is immense. They are considered the safest security in the world.
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