Understanding Bonds - Question 102

Does a T-bill differ from a treasury note? A treasury bond? or are they all the same?

A T-bill (Treasury bill) is a short-term obligation of the U.S. Government. They have maturity lengths of one year or less, are purchased at a discount and mature at face value. At maturity (either 13, 26, or 52 weeks), the difference between your purchase price and maturity value is considered taxable interest income.

Treasury notes and Treasury bonds are also U.S. Government obligations but have longer maturities. The maturities are:

- Treasury notes: 2-10 years
- Treasury bonds: more than 10-30 years

Both Treasury notes and Treasury bonds pay interest every six months and are issued in $1,000 denominations.

When financial broadcasters refer to the interest of the “long bond,” they mean the 30-year U.S. Treasury bond.