Short-term government debts issued in denominations ranging from $1,000 to $1 million. Like many other cash-based investment vehicles, T-Bills do not pay interest but are sold at a discount and mature at par (100 per cent of face value). The difference between the purchase price and par at maturity represents the purchaser’s return, and is taxed as interest income.
Term of the Minute
- Investment Trust
A investment trust that usually generates cash flows from one business or operating company, unlike an investment fund, which generates income from a diversified pool or portfolio. The trust holds debt and equity interests of an operating business. Businesses that exhibit these characteristics may opt for a trust structure over a corporate structure to take advantage of tax efficiency.