US government bonds are called treasuries because they are sold by the US Treasury department. Treasuries come in a variety of different 'maturities', or lengths of time until maturity ranging from three months to 30 years various types of treasuires include:
These all vary based on maturity and amount of interest paid. Treasuries are guaranteed by the US government and are free of state and local taxes on the interest they pay.
Now, our clients should be aware of a few things about bonds before buying. These are the par value,the coupon rate,and the maturity rate.
Par Value:This is the amount of money the investor will receive once the bond matures, meaning tha the entity that sold the bond will return to the investor the original amount lent out,called the Principal,par value for corporate bonds is normally $1,000 although for government bonds,it can be much higher.
The Coupon Rate: is the amount of interest the bond holder will receive, expressed as a percentage of the par value. Thus, if a bond has a par value of $1,000 and a coupon rate of 10%, the person holding the bond will receive $100 a year. The bond will also specify when the interest is to be paid, whether monthly,quarterly,semi-anually or anually
Maturity Rate: maturity rate is the date when the bond issuer has to return the Principal to the Lender. After the debtor pays back the principal. It is no longer obligated to make interest payments.
All US Treasury debt securities;whether a $50 savings bond or a $1,000 treasury note,share some things in common: