Quick Definition

Treasury Bills, or T-Bills, are short-term government securities issued by the U.S. Treasury with maturities ranging from a few days to 52 weeks. They are sold at a discount and do not pay interest before maturity.

Examples

• 1An investor purchases a $10,000 T-Bill at a discount price of $9,700. Upon maturity, the investor is paid the full $10,000, earning a $300 return.
• 2A corporation diversifies its cash holdings by investing in T-Bills to manage short-term cash flows and reduce risk.
• 3During periods of economic uncertainty, investors may increase their holdings in T-Bills as a safe haven, reflecting a flight to quality.
• 4Financial advisors often recommend T-Bills as a part of a balanced investment portfolio for conservative investors seeking low-risk assets.

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