Business, Legal & Accounting Glossary
Treasury notes, also known as T-notes, are medium-term, fixed interest security offered by a federal government.
T-notes are also sold in the secondary market. They have liquidity due to their popularity in the secondary market.
T-notes or Treasury notes, are U.S. government bonds with a maturity of between one year and 10 years.
T-notes are medium-term loans to the U.S. government. They come in terms of 2-years, 3-years, 5-years, 7-years, and 10-years. They can be purchased directly from the U.S. government or from a bank that purchases them for you and can be purchased in units of $100.
T-bills have maturities of one year or less, while T-bonds have maturities of 20 or 30 years.
These bonds pay a coupon, which is a semi-annual interest payment. They are considered very safe investments and are actively traded in the active market. Because of this, the purchase price may be above or below the par value or face price of the T-note (usually $100). However, when the note matures, you are paid the face value of the note.
The notes can be purchased via a non-competitive bid, which means you will receive the number of notes you want, but the yield is outside your control and is determined by auction. They can also be purchased via a competitive bid, which means you may or may not receive all the notes you want at the yield you want, depending on what the yield is determined by auction. [2]
Most financial news reports mention something along the lines of “bonds were up today, which brought the yield down to …” (The price and yield move in opposite directions.)
T-notes are backed by the credit of the U.S. government, and thus are considered as close to a risk-free investment. The yield for the appropriate term Treasury note (or bill or bond) is used in the capital asset pricing model as part of the determination of the cost of capital or required rate of return.
The current and recent historical yields can be obtained from the U.S. Treasury at http://www.ustreas.gov/offices/domestic-finance/debt-management/interest-rate/yield.shtml
T-Notes
Bond
Treasury bill
TIPS
To help you cite our definitions in your bibliography, here is the proper citation layout for the three major formatting styles, with all of the relevant information filled in.
Definitions for Treasury Notes are sourced/syndicated and enhanced from:
This glossary post was last updated: 28th November, 2021 | 0 Views.