Economics Bonds Questions Medium
The main difference between a treasury bond and a treasury certificate lies in their respective maturity periods.
A treasury bond, also known as a government bond or a T-bond, is a long-term debt security issued by the government to finance its operations and projects. These bonds typically have a maturity period of 10 to 30 years. Treasury bonds pay interest semi-annually and the principal amount is repaid at maturity. They are considered to be relatively low-risk investments and are often sought after by investors looking for long-term income and stability.
On the other hand, a treasury certificate, also known as a treasury bill or a T-bill, is a short-term debt security issued by the government. These certificates have a maturity period of less than one year, typically ranging from a few days to 52 weeks. Treasury certificates are sold at a discount to their face value and do not pay periodic interest. Instead, investors earn a return by purchasing the certificate at a discount and receiving the full face value at maturity. Treasury certificates are often used by investors as a safe place to park their funds temporarily or as a tool for managing short-term cash flow needs.
In summary, the key difference between a treasury bond and a treasury certificate is their maturity period. Treasury bonds have longer-term maturities, typically ranging from 10 to 30 years, while treasury certificates have shorter-term maturities, usually less than one year.