What Is Treasury Stock?

Treasury stocks refer to bonds or gilts issued by the government of United Kingdom. The usual bonds offer a flat rate of return on their maturity, payable at annual or semi annual rests. The rate of return is linked to the market rate at the time of issue. Index linked bonds issued by the government offer returns linked to market rates at the time of maturity, subject to adjustment in line with retail price index.

In the United States, treasury stocks refer to stocks that are repurchased or bought back from the market by the issuing company. This reduces the tradable stock in the stock exchange. This ensures cash in shareholders' hands in lieu of dividends that attract tax. Stocks repurchased are shown as a reduction from equity shares in the balance sheet.