FI1 Treasury Bills

Treasury bills of three, six and nine months trade together.

Objective

Trade the bills against each other. Assessed on profit and loss.

What it shows

• Bills as discount securities: price below face, return from the pull to par.
• Short-term rates from the prices of bills of different maturities.
• The shape of the money-market curve.

Watch out for

• Comparing prices instead of yields.
• Reading the lower price of a longer bill as a bargain, when it is a longer wait.
• Equal amounts of each bill, which is not equal exposure to rates.

Who takes part

• Trader — every student. Trades BILL3, BILL6 and BILL9, three Treasury bills.

Class size

Ten to forty students in one role. The first case of the fixed-income track, so a class new to the book is fine.