The Key Difference Between Treasury Bills and Treasury Bonds

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Feature Treasury Bills (T-Bills) Treasury Bonds (T-Bonds)
Definition Short-term government debt securities issued at a discount, maturing within one year. Long-term government debt securities with fixed interest paid periodically, maturity over 10 years.
Maturity Period Typically 4, 13, 26, or 52 weeks (less than one year). Typically 10 to 30 years.
Interest Payment No periodic interest; sold at discount and redeemed at face value. Fixed interest (coupon) paid semi-annually until maturity.
Investment Purpose Used for short-term cash management and liquidity. Used for long-term investment and income generation.
Risk Level Very low risk; backed by government credit. Very low risk; backed by government credit.
Price Volatility Generally less volatile due to short maturity. More price sensitive to interest rate changes due to long maturity.
Tax Treatment Interest income is exempt from state and local taxes in some countries. Interest income generally taxable at federal, state, and local levels.
Liquidity Highly liquid and actively traded in money markets. Highly liquid but less so compared to T-Bills.
Pricing Sold at discount; no coupon payments. Sold at or near face value; pays coupons.
Treasury Bills vs Treasury Bonds
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