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Treasury Receipt Meaning & Definition

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Definition of Treasury Receipt

Treasury receipt is a zero coupon bond created by a brokerage firm, which is backed by US Government Securities issued at discount and matures at par.

Applying "Treasury Receipt" to Securities Exams:

Broker dealers will purchase a large block of Treasury securities and split them into two different components, a principal payment and a series of interest payments. The brokerage firm will then sell the principal payment to be made in the future at a discount to investors who want to receive a stated amount of money ( the principal payment) in the future. The firm will then sell the semi annual interest payments to investors who are seeking current income.

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