T-BOND
Back to GlossaryDefinition
A fixed-rate U.S. government debt securities with a maturity range between 10 and 30 years. It pays semiannual interest payments until maturity, when the face value of the bond is paid.
Summary
A T-Bond (Treasury Bond) is a long-term debt security issued by the U.S. government with maturities typically ranging from 10 to 30 years. When you buy a T-Bond, you're essentially lending money to the federal government, which promises to pay you back the full amount (principal) at maturity plus regular interest payments (called coupon payments) every six months. T-Bonds are considered among the safest investments because they're backed by the full faith and credit of the U.S. government, making default virtually impossible.
Usage Context
Essential for understanding government debt markets, fixed-income investing, portfolio diversification, monetary policy impacts, and risk-free rate concepts in finance and economics courses.
Common Confusions
- Confusing T-Bonds with corporate bonds - T-Bonds have virtually no default risk
- Not understanding that bond prices move inversely to interest rates
- Thinking all Treasury securities are the same - they differ by maturity length
- Confusing coupon rate with current yield or yield to maturity
- Assuming you must hold bonds until maturity - they can be sold in secondary markets
