T-Bills Definition: Treasury bills (aka. T-Bills) are short-term debt obligations that are backed by the US government and which have less than a year’s maturity. They are sold in $1000 denominations and purchases can go up to 5 million. Commonly, T-bills come with 4-week (1 month), 13-week (3 month) or 26-week (six month) maturities. The issuing of T-bills is done by a competitive bidding process where the bids are placed on “discounts from par” which means that unlike in the case of conventional bonds with fixed interest rates, here, it is the bond appreciation that gives the holder his returns. For example, if you buy a T-bill with a 13-week maturity at $9,950. What happens here … [Read more...]