Our word of the day is “Treasury Bond or T-Bond”

A T-bond is a marketable, fixed-interest government debt security with a maturity of more than

10 years. Treasury bonds make interest payments semi-annually and the income that holders

receive is only taxed at the federal level. Treasury bonds are issued with a minimum denomination

of $1,000. The bonds are initially sold through auction in which the maximum purchase amount

is $5 million if the bid is non-competitive or 35% of the offering if the bid is competitive.

A competitive bid states the rate that the bidder is willing to accept; it will be accepted

depending on how it compares to the set rate of the bond. A non-competitive bid ensures

that the bidder will get the bond but he or she will have to accept the set rate. After

the auction, the bonds can be sold in the secondary market.