The primary benefit of Treasury securities is interest income, like other debt securities. Some Treasury securities pay consistent semiannual interest - Notes, Bonds, and TIPS. Others don’t make periodic interest payments; instead, the investor receives interest at maturity - Bills, STRIPS, and T-Receipts.
Agency securities can also provide income, and in some cases the payments are more frequent. For example, mortgage backed securities typically pay monthly income to investors. If you need more frequent interest payments, pass through certificates and collateralized mortgage obligations (CMOs) are common choices.
U.S. Government and agency securities are generally considered safe from default risk because they’re directly or indirectly backed. In most cases, these securities are rated AAA or AA. Liquidity risk is also minimal for U.S. Government securities: the U.S. Government securities market is the largest in the world and is supported by global demand. So if an investor needs to sell something like a Treasury bond, it’s typically easy to find a buyer.
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