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-note 2-10 yrs Tax-exempt Non-exempt $1,000 yield yes
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.



Agency Bonds

Related Articles
  1. Investing

    Introduction to Treasury Securities

    Purchasing bonds that are backed by the full faith and credit of the U.S. government can provide steady guaranteed income and peace of mind. Knowing the characteristics of each type of treasury ...
  2. Investing

    What's a Treasury Note?

    A 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.
  3. Trading

    Sizing A Futures Trade Using Average True Range

    Futures trading is risky business, so it's crucial that traders' positions match the level of risk they are willing to bear.
  4. Investing

    The Basics Of The T-Bill

    The 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 ...
  5. Investing

    What's a T Bond?

    Treasury bonds, or T-bonds, are marketable securities issued by the US government, and are available in increments of $100. Bonds have a maturity range of ten to 30 years, with 30 being the most ...
  6. Investing

    The Differences Between Bills, Notes And Bonds

    Treasury bills, notes and bonds are all marketable securities sold by the U.S. government to pay off debts and to raise cash.
  7. Investing

    The Importance Of U.S. Treasury Rates

    U.S. Treasury bond interest rates affect more than just bondholders! It impacts the day to day lives of all consumers.
  8. Investing

    What are Treasury STRIPS?

    STRIPS is an acronym that stands for Separate Trading of Registered Interest and Principal Securities.
Frequently Asked Questions
  1. Who are Monsanto's main competitors?

    Learn about Monsanto Company's two main operating divisions and its main competitors within each sector, including The Mosaic ...
  2. What is an assumable mortgage?

    The purchase of a home is a very expensive undertaking and usually requires some form of financing to make the purchase possible. ...
  3. Do I have to complete all exams within a certain period of time to receive the CFA charter?

    According to the CFA Institute, a candidate can take as much time as necessary to complete all three levels of the CFA program.Therefore, ...
  4. What is a reasonable amount of debt?

    It really depends on numerous factors - what stage of life you are at, your spending and saving habits, the stability of ...
Trading Center