Treasury Securities
US government debt: bills, notes, and bonds.
What is Treasury Securities?
Backed by the full faith and credit of the US government and treated as the risk-free benchmark. T-bills mature in one year or less and are sold at a discount; notes run 2-10 years; bonds run 20-30 years. Interest is exempt from state and local tax.
Treasury Securities: a worked example
A 6-month T-bill bought at $9,800 and redeemed at $10,000 yields about 4.1% annualized.
More terms in Securities & Instruments
Common Stock
An ownership share in a company, with voting rights and last claim on assets.
Preferred Stock
Equity with a fixed dividend and priority over common, usually without votes.
Bond
A loan to an issuer that pays interest and returns principal at maturity.
Coupon Rate
The bond's stated annual interest as a percentage of par.
Yield to Maturity (YTM)
The total annualized return if you buy today and hold to maturity.
Par Value (Face Value)
The principal repaid at maturity, conventionally $1,000 per bond.
Duration
A bond's price sensitivity to a 1% change in interest rates.
Credit Rating
An agency's assessment of an issuer's likelihood of default.