US Government Bonds
U.S. government bonds are also known as treasury securities, and they are issued by the United States Department of the Treasury.
This is the primary means through which the U.S. government secures its debt to finance large-scale projects. There are
three primary marketable treasury securities available to investors: treasury bills, treasury notes, and treasury bonds.
Treasury Bills
Treasury bills are probably the safest investment you could possibly get. As such they usually have a very low yield
to maturity. Treasury bills are essentially bonds that mature in one year or less—so they are very short term.
They are similar to zero coupon bonds in that they do not pay interest. Rather
they are purchased at a discount to give the investor a profit when the bond matures and it is redeemed. Treasury
bills are issued with maturity dates of 28 days, 91 days, and 182 days. So again they are very short term investments.
Treasury Notes
Treasury notes are still very safe investments, but these are essentially bonds that have a maturity
range between one and ten years. Interest is paid to the bondholders every six months and are issued with maturity
dates of 2, 5, and 10 years.
Treasury Bonds
Treasury bonds have the longest maturity of the government bonds at anywhere from 10 to 30 years. While these
are still very conservative investments, they do carry the largest amount of risk of all the US government bonds.
Remember, the longer the term of the bond, the more risky it gets.
