1.1.8.2 T Bills (Issued on Behalf of the Government)

Treasury bills are short-term instruments, with the longest maturity of one year. Bills are discounted instruments. Discounted instruments usually do not have a coupon, or fixed, interest rate. Instead, the bills are bought at say $8 amount, and you receive a higher amount (the face value of say $10) at maturity. The difference between the two amounts is the discount. The rate of interest earned is ‘built into the discount.