Treasury Securities

See Also:
Fixed Income Securities
Zero Coupon Bonds
What is Inflation?
Coupon Rate Bond
Non-Investment Grade Bonds (Unsecured Debentures)

Treasury Securities consist of debt instruments issued by the U.S. government by the Bureau of Public Debt. Therefore, the market for these instruments is very liquid. Oftentimes, consider them to be basically risk free. This is because the United States Government backs them by the good faith.

Treasury Securities Explained

Treasury securities, as said above, are very liquid and essentially risk free. The U.S. government sells them at treasury securities‘ auctions. A treasury security auction is generally held a week after the announcement for a new issuance of securities. There is also a large secondary market for them where they are traded on a day to day basis. Rates vary from instrument to instrument, and are generally in relation to a treasury security’s maturity. There are currently four types of these instruments. See the following instruments listed from most liquid to least as well as shortest maturity to the longest maturity:
1) Treasury Bills (t bills)
2) Treasury Notes (t notes)
3) Treasury Bonds (t bonds)
4) Treasury Inflation Protected Securities (TIPS)
Note: There is one more type of security that exists from stripping the coupons and principal away from the treasury security as a whole. They are also known as Treasury STRIPS.


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