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What is a Treasury Note?

Treasury notes are government-issued coupon bonds with maturities between 1 and 10 years.

A large secondary market exists for Treasury Notes, and they can be acquired at issue in a competitive bid or a noncompetitive bid auction. They are extremely popular for their marketability and six-month interest payment schedule. They do have interest rate risk, since treasuries issued with higher interest rates will make the ones already issued with lower rates less valuable.

Auctions are held frequently for institutional bidders; for example, there were 310 auctions in 2010, and the treasuries sold raised $8.4 Trillion that the government could use to pay off old notes and bonds which had reached maturity and to generate more new money.

What is the “Riskless” (or Risk-Free) Rate of Return?
What does Market Risk Premium mean?
How Do I Measure My Risk Tolerance?

Keywords: bonds, U.S. Treasuries, government bonds, auction, interest rate risk, investment basics,