At maturity, what does the holder of a Treasury bill receive?

At maturity, what does the holder of a Treasury bill receive?

• A. The face value
• B. The original purchase price
• C. The face value plus interest
• D. The market value at maturity

Answer: (A)

Treasury bills are issued at a discount and redeemed at their face value at maturity, with no periodic interest payments. The return you earn is the difference between the purchase price and the face value, which is paid when the bill matures. So at maturity you receive the face value, not the amount you originally paid, nor any additional interest or the market value. For example, a bill with a face value of 1,000 bought for 970 will pay 1,000 at maturity, making the 30 difference the interest earned.

Treasury bills are issued at a discount and redeemed at their face value at maturity, with no periodic interest payments. The return you earn is the difference between the purchase price and the face value, which is paid when the bill matures. So at maturity you receive the face value, not the amount you originally paid, nor any additional interest or the market value. For example, a bill with a face value of 1,000 bought for 970 will pay 1,000 at maturity, making the 30 difference the interest earned.