108 The Basics of Government Securities
The Basics of Government Securities
To fund government programs and to meet its payrolls, the US government issues its own bonds from the Treasury and from several government agencies. Institutional investors trading very large blocks of bonds do most of the trading in these securities. Most individual investors invest in government bonds through mutual funds. Overall, US government bonds are very popular with investors worldwide.
Things To Know
- Many people consider US government bonds the safest of all because of the creditworthiness of the US government.
How they work
Government bonds offer fixed interest rates. Many people consider them the safest of all because of the creditworthiness of the US government. Most government bonds do not have specific collateral backing them. Instead, they are backed by the full faith and credit of the US government.
Government bonds have maturities ranging from one to 50 years. Although some government securities mature in less than one year, those securities are really not bonds but are part of the money market.
