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
- Bought Deal Underwriting
Bought Deal Underwriting is a type of underwriting where the brokerage firm acts as principal. The brokerage firm risks its own capital to purchase all of the securities to be issued. If the price of the securities decreases before the brokerage firm has had a chance to resell the securities to its clients, the firm absorbs the loss.