ACCA Financial Management (F9) Certification Practice Exam

What is the typical maturity for Treasury Bills?

1. 91 days

2. 180 days

3. 270 days

4. 365 days

The correct answer is: 91 days

Treasury Bills, often referred to as T-bills, are short-term government debt instruments that are issued to finance national debt and other government projects. They are typically issued with maturities of 91 days, 182 days, and 364 days. However, the common benchmark for T-bills that is widely recognized and referenced is the 91-day maturity. The 91-day T-bill is popular because it provides a low-risk investment suitable for those looking for a safe place to park cash for a short period. Investors buy these bills at a discount to the face value, and upon maturity, they receive the full face value, the difference representing the interest earned. Other maturities like 180 days (182 days) and 270 days (approximately 9 months) are also available, but they are less commonly referred to when discussing typical T-bill maturity, as 91 days is frequently used for short-term investment strategies and risk management. The 365-day maturity does not align with the standard offerings for Treasury Bills, as this duration falls more in line with longer-term Treasury securities rather than T-bills.