Treasury Bonds

Topics In Order:

  • Quick Facts
  • Durations
  • Bidding Rules
  • Maturation Options
  • Purchase Price Calculation Formulas (a bit more advanced, and not really necessary with the other calculators available)

    Quick Facts:

  • T-bonds can only be bought online, as of January, 2012 due to a government a ction to reduce expenditures.
  • Treasury bonds are issued only in terms of thirty years.
  • When a treasury bond finally matures, the owner is paid the face value of the bond.
  • If you possess a treasury security, you can use the proceeds to purchase another security of the same type.


Buying These securities are bought in multiples of $100. It's price is dependant on its interest rate and yield to maturity; therefore, if the yield to maturity (YTM) is less than the interest rate the price will be below par value and vice versa. They pay a fixed rate of interest semiannually and once the bond matures the owner is paid the face value of the bond.
Selling These securities are usually sold above the face value, as they are often kept for so long, 20 to 30 years, that the interest they accumulate because massive. These can be usually sold through the same institution one purchased them through originally, usually at a small commission.
Maturation These mature in about 20 to 30 years. This makes them an excellent investment for retirement, as it produces a steady stream of income that is predictable. The drawback, of course, is that your money will be locked away in the investment, until the maturation date.




Bidding Rules:


Maturation Options:

Purchase Price Calculation Formulas:

P = A (1 -- ((R x T) / 360))

where: P = Price of bill with discount (also known as the "principal investment"); A = Face value of bill; R = Discount rate (as a decimal); T = Number of days to maturation


1. Example (at 0.27% discount and 52-week maturation):          

P = $300(1 -- ((.0027 x 364) / 360))

P = $299.18