treasury-bond

Vocabulary Word

Definition

A 'treasury bond' is a type of investment where you lend money to the government. In return, the government promises to pay you back with interest after a certain amount of time. This is a safe way to grow your money over time.

Examples in Different Contexts

In economics, treasury bonds are used by governments to finance various public projects and manage the country's debt. An economist might explain, 'The sale of treasury bonds allows the government to raise funds for infrastructure projects without increasing taxes.'

Practice Scenarios

Government

Scenario:

We have to fund the new infrastructure project, but increasing taxes would be challenging. What are our other financing options?

Response:

An alternative could be raising funds through the issuance of treasury bonds. This way, we could avoid increasing the tax burden on taxpayers.

Business

Scenario:

The bond market seems quite volatile recently. Do you think this could affect our company's borrowing costs in the short term?

Response:

If the treasury bond yields continue to increase, we may see an uptick in borrowing costs. However, the impact might not be immediate.