Ace the AFP Exam 2025 – Boost Your Financial Wizardry!

Treasury bonds are long-term debt securities issued by the U.S. government, typically with maturities that can range from 10 to 30 years. They are part of the larger category of U.S. Treasury securities, which also includes Treasury bills (short-term) and Treasury notes (intermediate-term). Investors purchase Treasury bonds as a way to lend money to the government; in return, the government pays interest, known as the coupon rate, at regular intervals until the bond matures. Upon maturity, the face value of the bond is paid back to the bondholder.

The long-term nature of these instruments makes them appealing to investors seeking stable, predictable returns over an extended period. They are considered one of the safest investments because they are backed by the full faith and credit of the U.S. government, making them less risky compared to most other types of investments.

This answer accurately reflects the characteristics of treasury bonds, distinguishing them from the other types listed, such as short-term debt instruments, corporate loans, or equity shares in government enterprises, which do not share the same structure or backing.