In the United States, the history of the treasury bill dates back to December 1929. To tackle the unforeseen financial demands that occurred during, and after, World War I, the US Treasury issued bills, notes, and bonds.
After World War II, along with their popularity over other short-term government securities, and there has been a gradual rise of acceptance of treasury bills as marketable treasury securities. This is because they:
- have a very short maturity period
- are easier to issue and hence less expensive for the Treasury
- there is no pre-determined interest rate
Treasury bills are a short-term marketable securities issued on discount basis rather than at par, the price of which is determined by competitive bidding. Purchase can be done primarily through these auctions, however, at the secondary level, the bills can be bought and sold from traders.
The bills are sold on a weekly basis with a maturity period of within 1 year, and are issued with maturities of:
- 4 week or 28 day ( 1 month)
- 13 week or 91 day (3 months)
- 26 week or 182 day (6 months)
- Discount Yield or Discount Rate: the annualized rate of return based on Par Value and calculated on a 360 day basis
- Investment Yield or Equivalent Yield: the annualized rate of return based on the Purchase Price calculated on a 365 day basis
- Current Price of Treasury Bills
