Introduction:
Treasury bills, commonly known as T-bills, are short-term debt instruments issued by the government to raise funds. They are considered zero coupon bonds because they are sold at a discount to their face value and do not pay any periodic interest payments to the bondholder.

Explanation:
Treasury bills are called zero coupon bonds due to the following reasons:

Zero Coupon:
Zero coupon bonds are those bonds that do not pay any periodic interest during their tenure. Instead, they are sold at a discount to their face value and provide a return to the investor upon maturity, when the bondholder receives the face value of the bond. Similarly, T-bills are issued at a discount to their face value, allowing investors to purchase them at a lower price than what they will receive upon maturity.

Discounted Purchase:
When investors buy T-bills, they pay a price lower than the face value. For example, if a T-bill with a face value of $1,000 is issued at a discount price of $950, the investor pays $950 to purchase the T-bill. The difference between the purchase price and the face value represents the investor's return or yield on the investment.

No Periodic Interest Payments:
Unlike traditional bonds, T-bills do not make periodic interest payments to the bondholder. Instead, the interest is effectively earned through the difference between the discounted purchase price and the face value received at maturity. This means that investors do not receive any cash flows during the life of the T-bill but rather benefit from the capital appreciation as the bond approaches maturity.

Maturity and Return:
T-bills have relatively short maturities, ranging from a few days to one year, with commonly issued maturities of 91 days, 182 days, and 364 days. At maturity, the investor receives the full face value of the T-bill. The return on investment is calculated by subtracting the purchase price from the face value and expressing it as a percentage of the purchase price.

Conclusion:
In summary, treasury bills are referred to as zero coupon bonds because they are sold at a discount to their face value, do not make periodic interest payments, and provide a return to the investor upon maturity. Their structure allows investors to earn interest through capital appreciation rather than receiving periodic interest payments.