Government Bonds
Treasury bills are considered zero-coupon securities because they:
T-bills: zero coupon, sold at discount, mature at par, max 1 year maturity.
Complete Analysis & Legal Rationale
T-bills are issued at a discount to face value and mature at par. The difference between purchase price and par value represents the investor's return. They do not make periodic interest payments.
Distractor Autopsy (Why Other Options Are Traps)
FINRA exam writers design incorrect distractors using specific calculation mistakes and regulatory misconceptions. Review why each option succeeds or fails:
T-bills make no periodic interest payments.
Matches the verified teaching point in the explanation.
T-bills have fixed returns determined at purchase.
T-bills do not pay interest; the return is the discount.
Official Standard: Primary reference for Treasury bills/notes/bonds/STRIPS characteristics (verify current Treasury materials).
Official Standard: Outline-level citation: item maps to Series 7 topic coverage. Prefer a specific FINRA/SEC/MSRB rule citation in a later author pass.