Finance Of The Public Debt

2307 Words Oct 8th, 2014 10 Pages
Buying Treasury Securities
The Bureau of the PUBLIC DEBT
Department of the Treasury
Treasury Securities

The Treasury issues three types of marketable securities - bills, notes, and bonds. These securities are direct obligations of the United States Government. When originally issued, they are sold through an auction process. They are commonly known as marketable securities because after their original issue that may be bought or sold in the secondary (commercial) market at the prevailing market prices through financial institutions, brokers, and dealers in investment securities.

The primary distinction between a bill, note, and bond is the length of time, or term, the security will be outstanding from the date of issue. Treasury bills are short-term obligations issued with a term of one year or less. Treasury notes are medium-term obligations issued with a term of at least one year, but not more than ten years. Treasury bonds are long-term obligations issued with a term greater than ten years. The Treasury announces the term (issue and maturity dates) with each new issue of a bill, note and bond.

Another difference is that Treasury bills do not bear a stated interest rate as do Treasury notes and bonds. Bills are sold at a discount from par. The owner does not receive interest payments during the life of the investment. The difference between the purchase price of the bill and the amount which the owner is paid at maturity (par), or when the bill is sold prior to…

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