Fixed-Income Investments Overview
T-Bills, Commercial Paper and Bankers' Acceptances
Treasury bills (T-Bills) and other money market securities such
as commercial paper and bankers' acceptances are considered to
be the safest segment of the fixed-income market.
Issued at a discount, T-Bills are short-term debt securities issued
or guaranteed by federal, provincial or other governments. The
stated interest rates for T-Bills are fixed when issued, but values
will fluctuate based on changes to the central Bank
Rate. A T-Bill's
return is calculated based on the difference between the price
paid and the par value (also known as the denomination or face
value). T-Bills mature at par (typically 90 or 180 days) and
do not pay fixed interest payments like most bonds.
Unlike T-Bills, commercial paper and bankers' acceptances are
issued by corporations. A commercial paper is a negotiable promissory
note with a term of a few days to a year, and is not generally secured
by company assets. A bankers' acceptance is a short-term
promissory note bearing the unconditional guarantee (acceptance)
of a major Chartered Bank. Bankers' acceptances offer superior
yields to T-Bills, with higher quality and liquidity than most
commercial paper issues.
For an overview of other types of fixed-income investments, please
visit the following links:
To learn about individual RBC Funds and how they can address your
investment objectives, access our Fund
Updates. If you are ready to invest now, contact your advisor
or explore the options
available to invest with RBC Financial Group.
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