U.S. Treasury Securities

What this video covers

• Why Treasury bills (T-bills) are zero-coupon instruments sold at a discount, and why the return is the difference between purchase price and face value, not interest payments
• How to distinguish T-bill maturities (4, 6, 8, 13, 17, 26, and 52 weeks) and why they are quoted on a discount yield basis
• Why Treasury notes (T-notes) and Treasury bonds (T-bonds) pay fixed coupons semiannually, and how their 32nds-of-par quotation works (e.g., 99-16 equals 99.50% of par)
• The critical exam trap of converting dash-notation bond quotes: why 101-08 is 101.25% of par, not 101.08%
• The universal tax treatment of all marketable Treasuries: federal income tax applies, but state and local taxes are exempt
• Why T-bonds carry the greatest interest rate risk and price volatility due to their 20-30 year maturities
• The shared characteristics of all marketable Treasuries: zero default risk, book-entry form only, over-the-counter (OTC) trading, and $100 minimum purchase with $100 increments