Certificate Of Indebtedness

DEFINITION of 'Certificate Of Indebtedness'

A short-term fixed income security once issued by the United States Treasury that had a coupon. A certificate of indebtedness was something of an "IOU" from the U.S. government, giving certificate holders the promise of a return of their funds with a fixed coupon, much like any other type of U.S. treasury. In 1981, the U.S. government stopped issuing such certificates and replaced them with short-term t-bills.

BREAKING DOWN 'Certificate Of Indebtedness'

Unlike treasury bills - which are sold at a discount and mature at par value without a coupon payment - certificates of indebtedness offered fixed coupon payments. Certificates of indebtedness typically matured in one year or less, much like the treasury bills and notes that succeeded the now-defunct certificates.

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RELATED FAQS
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    Before online brokers and personally-directed accounts, holding a physical stock certificate was a necessity, as this was ... Read Answer >>
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