TREASURY BONDS

Treasury bonds (T-bonds) are very long-term bonds. Once issued, they mature in from 10 to 30 years and pay interest semiannually. Because the full faith and credit of the federal government "backs" them, they are considered the safest of investments. Treasury bonds are issued in denominations of $1,000.

Treasury bonds have fixed coupon rates that specify how much interest will be paid semi-annually. However, Treasury bonds may be sold through the auction process, which affects the actual rates and yields. T-bonds issued today are non-callable. This means that the government cannot require their redemption earlier than maturity time.

Interest is taxable on the federal level but not on the state and local levels.

Treasury notes are the next topic.