DEFINITION of 'Federally Guaranteed Obligations'

A federally guaranteed obligation is debt that is backed by the full power of the United States government. This type of debt is considered risk-free because it is guaranteed by the full faith and credit of the United States government.

BREAKING DOWN 'Federally Guaranteed Obligations'

Examples of federally guaranteed obligations include Treasury bills (T-bills), Treasury notes and Treasury bonds. These different obligations are categorized based on length of time before maturity. Bills mature in less than one year; notes mature in one to 10 years; bonds mature in more than 10 years.


Bonds are considered safe when the issuing country is deemed economically stable. The debt of developing countries would carry more risk because their instability can lead to payment default.

RELATED TERMS
  1. 10-Year Treasury Note

    A debt obligation issued by the United States government that ...
  2. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with ...
  3. Guaranteed Bond

    A debt security that offers a secondary guarantee that interest ...
  4. Full Faith And Credit

    A phrase used to describe the unconditional guarantee or commitment ...
  5. Treasury Yield

    The return on investment, expressed as a percentage, on the debt ...
  6. Government Security

    A bond (or debt obligation) issued by a government authority, ...
Related Articles
  1. 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.
  2. 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 ...
  3. Investing

    What's a 10-Year Treasury Note?

    A 10-year Treasury note is an intermediate debt obligation issued by the United States government, and with a ten-year maturity date.
  4. Investing

    Explaining Government Bonds

    A government bond is a debt security a government issues.
  5. Investing

    Understanding Treasury Yield

    Treasury yield refers to the return on an investment in a U.S. government debt obligation, such as a bill, note or bond.
  6. Investing

    A Look At National Debt And Government Bonds

    Learn the functions of the U.S. Treasury, and find out how and why it issues debt.
  7. Financial Advisor

    Advising FAs: Explaining Bonds to a Client

    Most of us have borrowed money at some point in our lives, and just as people need money, so do companies and governments. Companies need funds to expand into new markets, while governments need ...
  8. Investing

    How Risk Free Is The Risk-Free Rate Of Return?

    This rate is rarely questioned - unless the economy falls into disarray.
  9. Investing

    IEI: iShares 3-7 Year Treasury Bond ETF

    Take a closer look at the iShares 3-7 Year Treasury Bond ETF, which is a BlackRock issue focused on intermediate maturity government bonds.
RELATED FAQS
  1. Are long-term U.S. government bonds risk-free?

    For any debt obligation to be considered completely risk-free, investors must have full faith that the principal and interest ... Read Answer >>
  2. What's the difference between bills, notes and bonds?

    Treasury bills (T-Bills), notes and bonds are marketable securities the U.S. government sells in order to pay off maturing ... Read Answer >>
  3. How are treasury bills taxed?

    Read about how the Internal Revenue Service collects taxes on treasury bills purchased from the United States government ... Read Answer >>
  4. When are treasury bills best to use in a portfolio?

    Understand the role that U.S. Treasury bills can play in an investment portfolio and why they represent one of the most liquid ... Read Answer >>
  5. How does a company obtain a bank guarantee?

    Find out how bank guarantees work, why they are issued and the process that a business normally goes through to acquire one ... Read Answer >>
  6. How is the risk-free rate determined when calculating market risk premium?

    Learn how the risk-free rate is used in the calculation of the market risk premium, and understand why T-bills provide the ... Read Answer >>
Hot Definitions
  1. Federal Direct Loan Program

    A program that provides low-interest loans to postsecondary students and their parents. The William D. Ford Federal Direct ...
  2. Cash Flow

    The net amount of cash and cash-equivalents moving into and out of a business. Positive cash flow indicates that a company's ...
  3. PLUS Loan

    A low-cost student loan offered to parents of students currently enrolled in post-secondary education. With a PLUS Loan, ...
  4. Graduate Record Examination - GRE

    A standardized exam used to measure one's aptitude for abstract thinking in the areas of analytical writing, mathematics ...
  5. Graduate Management Admission Test - GMAT

    A standardized test intended to measure a test taker's aptitude in mathematics and the English language. The GMAT is most ...
  6. Magna Cum Laude

    An academic level of distinction used by educational institutions to signify an academic degree which was received "with ...
Trading Center