annuities and loans

Treasury Bills and Treasury Notes
Name
Institutional Affiliation
Treasury Bills and Treasury Notes
Both the Treasury Bills (T-Bills) and the treasury notes are governments issued and are both considered risk-free investments as they do not lose the principal amounts. However, the risk-free assumptions do not cover the interest rates and the inflation. The securities are fixed-income assets inferring that any rise in interest rates negatively affects them (Yi, 2014). Such risks have a more significant impact on the treasury notes than on the treasury bills due to the long period associated with the t-notes, and thus, the treasury notes have higher interest rates covering the interest rate risk. T-Bills are short-term securities that mature within one year with different maturities of four weeks, thirteen weeks, twenty-six weeks, and fifty-two weeks. The bills are auctioned depending on the periods: the T-bills with less than six months maturity are sold once in a week while the yearly bills are auctioned in every four weeks. The short periods associated with the T-bills mean that their yields are lower since the chances of interest rates changing are low.
On the other hand, the treasury notes have a more extended maturity date, and thus their interest rates are higher to cover the probability of the interest rates changing within the period (Yi, 2014). The treasury notes have maturity extending from one year to ten years.
Decision Criteria
Considering that the government cushions both the securities against the loss of the principal, a prudent investor after growth of the principal would opt for the asset that has higher interest rates.

Treasury notes have a higher interest rate emanating from the elongated periods of maturity than the T-bills. I would, therefore, invest in the treasury notes to benefit from the high-interest rates.
Reference
Yi, J. (2014). Treasury Bills and Central Bank Bills for Monetary Policy. Procedia – Social and Behavioral Sciences, Vol. 109 (8): PP. 1256-1260