Question

select the terms with the definitions of a treasury bill(t-bill). purchase price purchase price drop zone empty. discount discount drop zone empty. maturity value maturity value drop zone empty. effective rate

Answer 1

The terms with the definitions of a treasury bill are as follows:

• Purchase price - The value of the T-bill less the discount.
• Discount - The interest of the T-bill.
• Maturity value - The face value of the T-bill.
• Effective rate -  The actual interest rate.

What is a treasury bill?

In financial market, the "Treasury Bill" (T-Bill) can be defined as short-term debt obligation backed by the U.S. Treasury Department with a maturity of one year or less which are usually sold in denominations of $1,000 while some can reach a maximum denomination of $5 million. For this instrument, the longer the maturity date, the higher the interest rate that the instrument will pay to the investor.

In a typical economy, the department of Treasury sells the T-Bills during auctions using a competitive and non-competitive bidding process. The noncompetitive bids are also known as non-competitive tenders which have a price based on the average of all the competitive bids received.

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