Treasury Bill (T-Bill)
What is Treasury Bill?
A short-term U.S. government debt security that matures in one year or less.
Understanding Treasury Bill
T-bills are sold at a discount to face value and pay no coupon; your return is the difference between the purchase price and the face value paid at maturity.
Because they are backed by the U.S. government and mature quickly, T-bills are considered among the safest investments and are often used as the risk-free rate in finance.
Example
Buy a 26-week T-bill with a $1,000 face value for $975. At maturity you receive $1,000, a $25 return.