Treasury Bills and Treasury Notes - Special Academic Support

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The modern world economy offers a wide range of tools for investment. All of them have individual characteristics and have their features. When making a choice between investing in Treasury bills or Treasury notes, I would choose favor of bills. Undoubtedly, both types of investments can be convenient in their way and bring their income. Still, the offer to invest in promissory notes is a little more attractive for several reasons.

An important reason for investing in a Treasury bill is that this investment is short-term. The owner of the account will be forced to update the statement regularly. That is, when the interest rate is expected to rise, the investor will be able to receive a higher income than the person who invested money for a more extended period. The interest rate of the Treasury bill is strictly fixed, which means that in case of instability of the financial system, the investor will be provided with a stable unshakable rate. Moreover, bills do not circulate in an organized market, so it is impossible to buy them through intermediaries. The purchase of a bill of exchange is possible directly from the issuer, which excludes the acquisition of a fake.

Even though the terms of the Treasury bill are negotiated individually, the interest rate is usually higher than for bonds. In addition, the longer the term, the higher the investors remuneration. As a result, when investing large amounts of money, an investor will be able to receive more income from Treasury bills than from bonds (Lam-Balfour, 2021). In addition, the statement is not issued with any specific conditions. The parties agree on the cost of the debt paper and the repayment procedure individually. This feature may benefit some investors and encourage them to invest money in promissory notes.

Reference

Lam-Balfour, T. (2021). U.S. treasury bonds, bills and notes: What they are and how to buy. Nerdwallet. Web.

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