The Ultimate Treasury Bills Quiz

By: Staff

4 Min Quiz

Image: refer to hsw

About This Quiz

You don't need to be a stock market or finance expert to invest in Treasury bills. Treasury bills are simple and easy to purchase and are a great and safe way to invest even small amounts of money. Take this quiz and learn how you can make a wise and easy investment with Treasury bills.

What is a benefit of investing in Treasury bills?

Purchasing Treasury bills is a simple and risk-free way to invest your money. You also don't need to invest a bundle of money for it to be worthwhile.

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When you purchase a Treasury bill you are lending money to:

By purchasing a Treasury bill, also known as a T-bill, your government is essentially borrowing your money.

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Every Treasury bill has a maturity date. What is this?

You can cash in a Treasury bill only at a pre-determined date, known as the maturity date. This essentially means that you cannot get your money back until the maturity date.

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What is the discount rate of a Treasury bill?

The discount rate is the percentage of interest earned on a Treasury bill. For instance, if you paid $960 for a Treasury bill and received $1000 at the maturity date, then the discount rate is four percent.

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When were Treasury bills first used by the American government?

In the United States, Treasury bills were first used during World War I as a source of emergency funds.

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How long is a typical Treasury bill investment?

Treasury bills typically mature one year from purchase. You can also purchase Treasury bills that mature in one month and six months from the date of purchase.

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What is the value of most Treasury bills?

The face value, or the par value, of most Treasury bills is $1,000 and $10,000. However, you can purchase Treasury bills raging from $100 to $1,000,000.

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What is the purpose of Treasury bills?

Treasury bills are a way for the government to make money from the public and help finance the government's national debt.

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Treasury bills are exempt from:

You won't have to pay local or state taxes on your Treasury bill purchase, but you will have to pay federal taxes.

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Where can you purchase a Treasury bill?

You can purchase a Treasury bill at a bank, through a broker, or on a Web site that sells Treasury bills.

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How are Treasury bills issued?

Treasury bills are issued weekly through an auction bidding process. Bills are only issued electronically and no longer come in paper form.

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What happens if you make a non-competitive bid for a Treasury bill?

Most people not familiar with the Treasury binding process make a non-competitive bid. This means that you accept the interest rate that is determined on the day of the auction.

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How is the interest rate of a non-competitive bid determined?

The interest rate of a non-competitive bid, also known as the set discount rate, is the average of all the competitive bids in the auction.

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What is the maximum amount of Treasury bills that you can buy as a non-competitive bidder in a single auction?

If you have it to spare, you can purchase a maximum of $5 million in Treasury bills as a non-competitive bidder.

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What is the maximum interest an investor can receive from a competitive bid?

The maximum interest rate, also known as discount rate, one investor can receive in a competitive bid is 35 percent.

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