Ace the AFP Exam 2025 – Boost Your Financial Wizardry!

Treasury bills, often referred to as T-bills, are short-term government securities that are issued to finance government operations and obligations. Their primary purpose is to provide a short-term investment option for individuals and institutions seeking a low-risk asset. T-bills are typically issued with maturities that range from a few days to one year, making them a popular choice for investors looking for stability and liquidity in their portfolio.

Because they are backed by the full faith and credit of the government, T-bills are considered one of the safest investment vehicles available. Investors purchase them at a discount to their face value, and upon maturity, they receive the full face amount. This structure not only helps to protect the principal invested but also attracts those looking to preserve capital while avoiding the volatility associated with other investment options.

Other options, such as financing long-term projects or serving as a long-term investment, do not align with the nature and time frame of T-bills. Additionally, while T-bills are a low-risk investment, they typically offer lower returns compared to other investment options, making the idea of them providing high returns inaccurate. Consequently, the primary function of T-bills remains as a short-term, low-risk investment option for those seeking safety and liquidity.