Treasury Bills are issued at what relative to par value?

Treasury Bills are issued at what relative to par value?

• A. At par value with coupons
• B. At a discount from par value
• C. At a premium to par
• D. At market value

Answer: (B)

Treasury bills are issued at a discount to par value. They are short-term, zero-coupon securities, so they pay no periodic interest; the return comes from the difference between the purchase price and the par value received at maturity. For example, a bill with par 100 might be issued for 97, and you get 100 at maturity, earning 3. They are not issued at par with coupons or at a premium, and while their market price can fluctuate, the issued price is set below par.

Treasury bills are issued at a discount to par value. They are short-term, zero-coupon securities, so they pay no periodic interest; the return comes from the difference between the purchase price and the par value received at maturity. For example, a bill with par 100 might be issued for 97, and you get 100 at maturity, earning 3. They are not issued at par with coupons or at a premium, and while their market price can fluctuate, the issued price is set below par.