What is the maximum maturity period for T-bills?

What is the maximum maturity period for T-bills?

• A. 5 years
• B. 10 years
• C. 1 year
• D. 30 years

Answer: (C)

The maximum maturity period for Treasury bills, commonly referred to as T-bills, is indeed 1 year. T-bills are short-term government securities that are issued with maturities of 4 weeks, 8 weeks, 13 weeks, 26 weeks, and 52 weeks, but they do not extend beyond one year. They are sold at a discount to face value, and the difference between the purchase price and the value at maturity represents the interest earned by the investor. This short-term nature differentiates T-bills from other types of U.S. Treasury securities, such as Treasury notes and Treasury bonds, which have longer maturities, ranging from 2 years to 10 years for notes, and up to 30 years for bonds. Understanding this distinction is crucial for investors looking at government securities based on their investment horizon and risk tolerance.

The maximum maturity period for Treasury bills, commonly referred to as T-bills, is indeed 1 year. T-bills are short-term government securities that are issued with maturities of 4 weeks, 8 weeks, 13 weeks, 26 weeks, and 52 weeks, but they do not extend beyond one year. They are sold at a discount to face value, and the difference between the purchase price and the value at maturity represents the interest earned by the investor.

This short-term nature differentiates T-bills from other types of U.S. Treasury securities, such as Treasury notes and Treasury bonds, which have longer maturities, ranging from 2 years to 10 years for notes, and up to 30 years for bonds. Understanding this distinction is crucial for investors looking at government securities based on their investment horizon and risk tolerance.