Question

What is the major difference between treasury bills and government bonds?

• A. Treasury bills are issued by private companies, whereas government bonds are issued by the government.
• B. A treasury bill is a short-term investment option, whereas a government bond is a long-term investment option.
• C. Treasury bills are issued by the government, whereas government bonds are issued by private companies.
• D. A government bond is a short-term investment option, whereas a treasury bill is a long-term investment option.

Answer 1

The correct option is B A treasury bill is a short-term investment option, whereas a government bond is a long-term investment option.

The government issues both treasury bills and government bonds. Treasury bills can be exchanged for cash within 91 days, 182 day, or 364 days. However, government bonds can be exchanged for cash only after a long period of time. In short, treasury bills are short-term while government bonds are long-term investment options.