One reason T-bills offer lower yields is that the interest earned on them is free from federal taxation.

Question

Quizplus · Accepted Answer

The interest earned on T-bills is subject to federal taxation, but it is exempt from state and local taxes, which is not the reason for their lower yields. Lower yields on T-bills are primarily due to their short-term nature and being considered virtually risk-free, as they are backed by the full faith and credit of the U.S. government.

One Reason T-Bills Offer Lower Yields Is That the Interest