SIE practice questioneasyTreasury Bills
Which of the following is TRUE about U.S. Treasury bills (T-bills)?
- AThey are subject to state and local income taxes
- BThey are issued with maturities of 10 years or more
- CThey are issued at a discount and mature at par value✓ Correct answer
- DThey pay semiannual coupon interest
Explanation
Why C — They are issued at a discount and mature at par value
T-bills are short-term government obligations (maturities of 4, 8, 13, 17, 26, or 52 weeks) issued at a discount from par and mature at face value. The difference is the investor's return. They do NOT pay periodic interest (B is wrong). T-bills are exempt from state and local taxes (D is wrong), though subject to federal tax.
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