What is the difference between a government Treasury bill, note or bond? What are typical uses for investments in a Treasury bill, note or bond?
Treasury Bills
Treasury bills are short-term government securities with maturities ranging from a few days to 52 weeks.
Treasury bills (also known as T-bills), are typically issued at a discount from the par amount (also called face value) at auction and at maturity the investor receives a payment equal to the par or face value of the bond. They do not pay out traditional interest payments like notes or bonds described below.
For example, you may see the price of a treasury bill quoted at $99.986111. This means that an investor purchases the bond for $99.986111 and receives $100 at the time of the bill’s maturity.
(For a more detailed look at Treasury Bills and how they are used by investors, read our definitions page on treasury bills, here)
Treasury Notes
Treasury notes are government securities that are issued with maturities of 2, 3, 5, 7, and 10 years and pay interest every six months until they mature.
Treasury Notes pay a set fixed interest payment every six months, which is established at the Note’s initial auction. The price of a note may be greater than, less than, or equal to the face value of the note.
When a note matures, you are paid its face value.
(For a more detailed look at Treasury Notes and how they are used by investors, read our definitions page on treasury notes, here)
Treasury Bonds
Treasury bonds are issued with maturities of 30 years and pay interest every six months.
Treasury Bonds pay a fixed interest payment every 6 months, which is established at the Bond’s initial auction. The price may be greater than, less than, or equal to the face value of the bond.
When the bond matures, investors are paid its face value.
(For a more detailed look at Treasury Bonds and how they are used by investors, read our definitions page on treasury bonds, here)
