Treasury Bills Defined
Treasury bills are short-term securities (issued with maturities
of 1 year or less) sold by the United States Treasury. Sales of these
securities are frequent, usually weekly. From time to time, the Treasury
also offers longer duration securities called Treasury notes and Treasury bonds.
A Treasury bill is a discount security. The holder of the Treasury bill does
not receive periodic interest payments. Instead, at the time of sale,
a percentage discount is applied to the face value. At maturity, the
holder redeems the bill for full face value.
The basis for Treasury bill interest calculation is actual/360. Under this system,
interest accrues on the actual number of elapsed days between purchase
and maturity, and each year contains 360 days.
 | Debt Instruments | | Computing Treasury Bill Price and Yield |  |
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