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U.S. Treasury Note
A debt security
backed by the full faith and credit
of the United States government with a maturity
between one and 10 years. They may be purchased directly from the government or from a bank
; they have coupon payments
payable every six months. Treasury notes may be bought competitively or non-competitively. In a non-competitive transaction
, one takes the interest rate
he/she is given on a Treasury note. In competitive investing, one bids
on a desired yield
; however, this does not mean it will be accepted. Treasury notes are low-risk
, low-return investments
. The minimum purchase is $1,000 and the maximum is $1 million in competitive bidding, or $5 million in non-competitive. They are known informally as T notes. See also: Treasury Bill
, Treasury Bond
Intermediate-term (1-10 years), interest-bearing debt of the U.S. Treasury that may be purchased through a bank or brokerage firm or directly from the Federal Reserve. An active secondary market makes it easy to resell a Treasury note.
Like US Treasury bills, Treasury notes are debt securities issued by the US government and backed by its full faith and credit.
They are available at issue through Treasury Direct in denominations of $1,000 and are traded in the secondary market after issue.
Notes are intermediate-term securities, with a maturity dates of two, three, five or ten years. The interest you earn on Treasury notes is exempt from state and local, but not federal, taxes.
And while the rate at which the interest is paid is generally less than on long-term corporate bonds, the shorter term means less inflation risk.