TREASURY BILL Meaning and
Definition
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A treasury bill, also known as a T-bill, refers to a short-term debt instrument issued by the government of a country to raise funds to meet its financial obligations or to manage its cash flow. It is typically issued with a maturity period ranging from a few days to one year, making it a popular choice for investors seeking a safe and low-risk investment.
The primary purpose of a treasury bill is to allow the government to borrow funds from investors by issuing a promissory note where it guarantees to repay the principal amount upon reaching maturity. In return for lending money to the government, investors receive the face value of the bill once it matures, earning a specified interest rate known as the discount rate. However, unlike other fixed-income securities, treasury bills are sold at a discount, meaning they are sold at a price lower than their face value. The difference between the discounted price and the face value determines the investor's return.
Due to their short-term nature and low risk, treasury bills are regarded as highly liquid assets and are often used as a benchmark for comparing the yield of other investments. They are predominantly purchased by institutional investors, banks, and individuals looking for a safe, low-risk investment option, or as a means of diversifying their investment portfolio. Moreover, government-issued bills, particularly those offered by stable economies, are considered risk-free investments since they are backed by the full faith and credit of the government, eliminating the possibility of default.
Common Misspellings for TREASURY BILL
- rreasury bill
- freasury bill
- greasury bill
- yreasury bill
- 6reasury bill
- 5reasury bill
- teeasury bill
- tdeasury bill
- tfeasury bill
- tteasury bill
- t5easury bill
- t4easury bill
- trwasury bill
- trsasury bill
- trdasury bill
- trrasury bill
- tr4asury bill
- tr3asury bill
- trezsury bill
Etymology of TREASURY BILL
The word "treasury bill" has an etymology that can be broken down into its individual components:
1. Treasury: The term "treasury" comes from the Old French word "tresor" meaning "treasure". It further derives from the Latin word "thesaurus" meaning "treasure" or "storehouse". In this context, treasury refers to the financial department or entity responsible for managing and safeguarding a country's financial resources.
2. Bill: The word "bill" has its origins in Old English, derived from the Germanic word "bile" or "billa", meaning a written document or a written record of a transaction. Specifically, in finance, "bill" refers to a written promise or obligation to pay a specified amount of money.
When combined together, "treasury bill" simply suggests a written financial obligation issued and managed by the treasury department of a government.
Similar spelling words for TREASURY BILL
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