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U.S. Treasury Bond
A debt security
backed by the full faith and credit
of the United States government with a maturity
of more than 10 years. They may be purchased directly from the government or from a bank
; they have coupon payments
payable every six months. Treasury bonds may be bought competitively or non-competitively. In a non-competitive transaction
, one takes the interest rate
he/she is given on a T-bond. In competitive investing, one bids
on a desired yield
, but this does not mean it will be accepted. Treasury bonds are low-risk
, low-return investments
. The minimum purchase is $1,000 and the maximum is $5 million in non-competitive bidding or 35% of the offering in competitive. They are known informally as T-bonds
. See also: Treasury bill
, Treasury note
Longer-term, interest-bearing debt of the U.S. Treasury. Treasury bonds are quoted and traded in thirty-seconds of a point.
Treasury bonds are long-term government debt securities with a maturity date of 30 years that are issued in denominations of $1,000.
You can buy any number of these bonds at issue in $1,000 increments, but not more than $5 million. Those purchases as well as sales can be made through a Treasury Direct account. Existing bonds trade in the secondary market.
While interest on Treasury bonds is federally taxable, it is exempt from state and local taxes. Treasury bonds are considered among the most secure investments in the world, since they are backed by the federal government.
However, like all debt securities, they are subject to market risk. This means their prices change to reflect supply and demand.