Treasury bills are Short-term debt instruments issued by the U.S. government to finance its operations and meet short-term cash needs. Let's go through each statement to determine which ones are true about Treasury bills.
A) Treasury bills do not pay interest.
This statement is incorrect. Treasury bills do pay interest, but it is expressed as a discount from their face value. For example, if a Treasury bill has a face value of $1,000 and is sold at a discount for $990, the difference of $10 represents the interest earned. B) Treasury bills do not have a maturity date.
This statement is incorrect. Treasury bills do have a maturity date, which is the date when the U.S. government agrees to repay the holder the face value of the bill.
Treasury bills typically have a maturity of one year or less, and they are issued with different maturities ranging from a few days to 52 weeks.
C) Treasury bills do not have a face amount.
This statement is incorrect. Treasury bills do have a face amount, which is the amount that the U.S. government promises to pay the holder at maturity. D) Treasury bills do not have an active secondary market.
This statement is incorrect. Treasury bills have an active secondary market, which means that they can be bought and sold before their maturity date. Investors can trade Treasury bills in the secondary market to buy or sell them at market
To summarize:
- Treasury bills do pay interest, but it is expressed as a discount from their face value.
- Treasury bills do have a maturity date.
- Treasury bills do have a face amount.
- Treasury bills do have an active secondary market.