Treasury Stock

[davidanthony]

If I invest £100,000 in Government Treasury Stock, why is it only worth £91,000 on the stock certificate?

[Buenchico]

I assume that you're buying them after the issue date, so the change in their value since that date will be reflected in the buying price.

As an analogy, a company might issue a thousand one pound shares (with the paperwork clearly stating that they're £1 shares). Later on the share price might have risen to £1.50, meaning that anyone who wants to buy those shares will have to pay £1500. However if looks at his paperwork he'll still see that he holds a thousand £1 shares. (i.e. the price of a share on paper is purely nominal and unrelated to the actual price which must be paid to buy such a share, which might be higher or lower).

If you buy 1000 gilts which are nominally worth £100 each on paper, but actually worth £110 each, you'll pay £11,000. If you've only got £10,000 to invest you'll only be able to buy roughly 910 gilts, so the nominal value on the paperwork will be about £91,000.

[Old_Geezer]

Excuse me if I muddle up worth, value, cost, price, etc. but...

Something is worth what someone will pay for it. That may differ from it's original nominal valuation.

[ubasses]

This article explains Gilts/Treasury Stock and how they work quite well
ww.telegraph.co.uk/finance/personalfinance/investing/3391860/Interest-rates-How-do-gilts-work-and-where-can-I-buy-them.html