Treasury bonds are complicated by history. Presently, Treasury sells bonds at a discount, but until 2001 T-bonds were sold as fixed-principal securities, like T-notes are today. Still, many fixed-principal T-bonds have not matured and are still owned by investors. Furthermore, T-bills and T-notes are all electronic, but the older outstanding T-bonds exist as paper certificates while the more recently issued ones exist as electronic entries in accounts.
Even though T-bonds are no longer sold as fixed-principal securities, they still pay interest every six months until maturity. At maturity, the U.S. Treasury pays back the principal to the owner. The principal is a multiple of $10,000, (or an order of magnitude more than the T-bills or T-notes, whose par value is $1,000).
The following table summarizes our discussion on the various types of treasuries discussed above:
|Types of Treasury Securities|
|Maturity||State/ Local||Federal Tax||Par value||Bid||Interest-bearing|
|T-bill||Year or less||Tax-exempt||Non-exempt||$1,000||dollar||no|
|T-bond||More than 10 years||Tax-exempt||Non-exempt||$10,000||Now dollar, pre-2002 yield||yes|
Once you have a handle on the topic of T-bonds, you can move on to STRIPS (Separate Trading of Registered Interest and Principal of Securities), which are debt securities created by stripping coupons from a T-bond.
InvestingA treasury note is a U.S. government debt security that offers a fixed interest rate and a maturity date that ranges between one and 10 years.
TradingFutures trading is risky business, so it's crucial that traders' positions match the level of risk they are willing to bear.
InvestingThe U.S. government has two primary methods of raising capital. One is by taxing individuals, businesses, trusts and estates; and the other is by issuing fixed-income securities that are backed ...
InvestingSTRIPS is an acronym that stands for Separate Trading of Registered Interest and Principal Securities.
InvestingU.S. Treasury bond interest rates affect more than just bondholders! It impacts the day to day lives of all consumers.
InvestingLearn about the BlackRock Global Allocation Fund Investor C Shares mutual fund, its portfolio makeup, and read an analysis of the fund's top five holdings.
InvestingLearn how investors wanting to safeguard their principals may consider ETFs based on U.S. Treasurys; these securities are viewed as the ultimate safe havens.
InvestingTreasury yield refers to the return on an investment in a U.S. government debt obligation, such as a bill, note or bond.
InvestingOver the long term, it pays to stick with stocks, despite the inevitable bouts of volatility that wrack stock markets from time to time.