What type of bond matures at face amount and is sold at a discount, typically with a maximum maturity of one year?

The correct answer is that the type of bond that matures at face amount and is sold at a discount, typically with a maximum maturity of one year, is a Treasury bill, commonly known as a T-bill.

T-bills are short-term government securities that the U.S. Department of the Treasury issues to finance national debt. They are sold at a discount to their face value, which means investors buy them for less than their maturity value. When the T-bill matures, the government pays back the full face amount to the holder. The difference between the purchase price and the face amount represents the interest earned by the investor. The short maturity period, typically ranging from a few days to one year, makes T-bills particularly appealing for those looking for a low-risk investment that provides liquidity and a guaranteed return at maturity.

In contrast, T-notes and T-bonds have longer maturities—T-notes range from two to ten years, and T-bonds can have maturities of 20 to 30 years. They also pay interest periodically, which differentiates them from T-bills. Convertible bonds, on the other hand, are corporate bonds that can be converted into a predetermined number of the company’s equity shares