Question

can you show and explain the relationship between 30 day tbill and 10 year treasury bond.

Answer 1

Relationship between 30-days T-bill and 10 years Treasury Bonds

1. Both are financial assets (i.e) a claim to the payment of a sum of money sometime in the future and/or periodic payment in the form of interest of dividend.

2. Upon maturity, these bonds and bills return their face value

3.They include a very low amount of risk

4. But 10 years treasury bonds are referred as long-term securities because these bonds have maturity after 10 years and on the other-hand 30 days T-bills considered as short term securities.

There are differences between T-bills and Treasury Bonds

T-Bills Treasury Bills

A Treasury Bill (T-Bill) is a short-term debt obligation backed by the U.S. Treasury Department with a maturity of one year or less.	A Treasury bond (T-bond) is a marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years.
They are considered among the safest investments since they are backed by the full faith and credit of the United States Government.	Treasury bonds are known in the market as primarily risk-free; they are issued by the U.S. government with very little risk of default
T-bills do not pay any coupon they are floated as a Zero coupon bond to the investors at a discount to the face value. At the end of the maturity period the investors gets the interest from the instruments in the form of return by the receiving the Face value from the bill.	Treasury Bond pay their investors interest for holding the bond in the form of coupon payments ,generally coupon are paid quarterly or semi annually to the investors.
In case of T-bills whether it is issued by Government or corporate there is no tax to be paid by the investors .	Government issued bonds are tax- free instruments but the corporate bonds are not tax free for the investors
T-bills have no default risk irrespective of the fact that whether hey are issued by the government or by the corporate	Treasury Bonds issued by the government are risk- free and do not have any default risk as they are backed by the government. Bonds issued by the corporate have default risk.