The profitability of the government securities: interest rate vs. yield

Abstract

The profitability of the financial instruments is in tandem with the managerial investment decision. To take right decisions the investors must have practical skills. Thus besides the general notions of government securities, investors must be familiar with the main calculation formulas applied to determine their profitability. In this context, the author shows how the price and the interest rate/yield of the government securities issued through the auctions by the government are determined. Based on this, investors can easily appreciate which government securities to buy: treasury bills or government bonds. The results indicate that the same debt instrument has a different interest rate and yield. Also, the paper highlights the yield curve’ importance and use. CZU: 336.763.33(478); JEL: G12, G23, H63; DOI: https://doi.org/10.53486/dri2022.17