A Government Bond is an IOU from the United States Treasury and is considered the safest security in the investment world. The almost unlimited ability of the United States Government to raise money is found in its capacity to acquire, by taxation or further borrowing, sufficient money to pay the interest and principal on its debts.
Government obligations run for terms ranging from a few weeks to thirty years or longer. The market value and yield of a Government Bond traded in the open market will be affected by the market values and yields of other competing fixed income instruments. Subsequently, a sale prior to maturity may result in a capital gain or loss. However, Government Bonds usually pay the lowest return rate of all securities.
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