Products & Their RisksQuestion 134 of 398
U.S. Treasury bills (T-bills) are:
a.Long-term bonds paying semiannual coupons
b.Perpetual securities with no maturity date
c.Short-term securities issued at a discount and maturing at face value, paying no periodic coupon
d.Tax-exempt municipal securities
Explanation
T-bills are short-term U.S. government obligations with maturities of one year or less. They pay no periodic interest; instead they are sold at a discount to face value, and the investor's return is the difference between the discounted purchase price and the face value received at maturity. They are considered virtually free of credit risk.
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