Glossary

Treasury Bills (T-Bills) are short-term government debt securities issued by a country's treasury department, typically with maturities ranging from a few weeks to one year. 📆

They are considered low-risk investments, as they are backed by the credit of the issuing government. T-Bills are sold at a discount to their face value, and investors earn a return when the bills mature and are redeemed at their full face value.

Example: The US Treasury Department issues T-Bills with maturities of 4, 8, 13, 26, and 52 weeks. An investor might buy a 26-week T-Bill for $9,800, and upon maturity, it would be redeemed at its face value of $10,000, generating a profit of $200.

Fun fact: T-Bills are often considered a nearly risk-free investment, and their yields serve as a benchmark for short-term interest rates in the financial market. The yield on a 3-month US T-Bill is often used as a proxy for the risk-free rate in financial models and calculations. ⚖️