In
US Fixed Income markets, a Bill is an instrument that
matures in less than one
year.
Another distinguishing
characteristic of a bill is that fact that it is
sold at a
discount to it's face value. Because of this, bills are known as
discount instruments. A bill, although it pays
interest, does so in a single payment received at the
maturity of the instrument.
For example, one might purchase a
US Government issued 91 day T-Bill for perhaps $980.00, and receive $1,000 at maturity (
i.e., 91 days later). This illustrates the concept of a
discount instrument.
See also
bond and
note.