Treasury Bill: Meaning, features, difference between treasury bills and treasury bonds

These are short term debt instruments issued the government through the central bank.

 

Features of Treasury Bills

  • They are issued at a discount.
  • They are used as a measure of the risk free rate of return.
  • They can be used mob-up excess liquidity in the economy and control initiation.
  • They enable the government to borrow from the public
  • The minimum investment in treasury bills is 100,000 shillings.

 

Difference between Treasury Bills and Treasury Bonds

Treasury Bills Treasury Bonds
1.        Minimum investment is shs. 100,000

2.        Short term debt instruments

3.        Are issued at a discount.

4.        They are not transferable.

5.        Interest on T. Bills is lower than on T. bonds

1.    Minimum investment is shs. 50,000.

2.    Long term debt instruments

3.    Are issued at par or face value.

4.    They are transferable

5.    Interest on T. Bonds is a premium higher than T. bills

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