How is a savings bond typically issued?

A savings bond is typically issued at a discount to its face value and matures at that face value. This means that when you purchase a savings bond, you pay less than its face value, and over time, it accrues interest until it reaches its full value at maturity. The process makes it an attractive savings vehicle for individuals, as the difference between the purchase price (the discounted amount) and the face value represents the interest earned on the bond.

For example, if a savings bond has a face value of $100, it may be issued for $50. Over the term of the bond, interest accumulates, and upon maturity, the holder can redeem it for the full $100. This design promotes saving for the future while also offering a safe investment with guaranteed returns.

Other options present different concepts that do not align with how savings bonds are issued. For instance, issuing a bond at a premium or with quarterly interest payments does not reflect the structure of savings bonds, which do not provide periodic interest payouts during their lifespan but rather a lump-sum payment at maturity. Similarly, issuing at market value with no maturity does not accurately describe the savings bond. Thus, the choice of being issued at a discount and maturing at face value accurately