Question

What is treasury bill? Explain how treasury bills could also be a source of money supply.

Answer 1

Hello..

Treasury bills are issued when the government need money for a shorter period while bonds are issued when it need debt for more than say five years.

Treasury bills; generally shortened as T-bills, have a maximum maturity of a 364 days. Hence, they are categorized as money market instruments (money market deals with funds with a maturity of less than one year).

Treasury bills are presently issued in three maturities, namely, 91 day, 182 day and 364 day. Treasury bills are zero coupon securities and pay no interest.

hope it helps