What are Treasury bills classified as?

Treasury bills are classified as cash equivalents because they are short-term government securities that are issued with maturities of one year or less. They are considered a highly liquid investment, meaning they can be easily converted to cash with minimal risk of losing value. Investors typically view Treasury bills as a safe place to park cash for a short period while earning a return, as they are backed by the full faith and credit of the U.S. government. This classification aligns them with other cash equivalents, such as money market funds and other short-term investments that maintain a high liquidity factor.

Long-term investments, in contrast, usually encompass assets held for more than one year, which Treasury bills do not qualify as. High-risk securities refer to investments that carry a greater chance of loss or are more volatile, which Treasury bills are not, as they are known for their stability and low risk. Lastly, stock investments represent ownership in a company and are fundamentally different from debt securities like Treasury bills, which are instruments for borrowing money rather than owning part of a company.