2.11.2 Treasury Notes and Bonds
Treasury notes are coupon bonds with maturities that range from 2 to 10 years. They are issued in denominations of $100 to $5 million and pay interest semiannually (twice a year). Treasury notes are non-callable, guaranteeing the holder the stated yield to maturity.
Treasury bonds are coupon-paying securities with maturities that range from 10 to 30 years. Like Treasury notes, they are issued in denominations that range from $100 to $5 million and pay interest semiannually. Unlike Treasury notes, however, Treasury bonds may have a call feature. Prior to 1985, the Treasury issued bonds with a 5- or 10-year call feature, and while it has not issued any more of these since, it is not precluded from doing so in the future.
The 30-year bond is often called the “long bond” by traders because it has the longest maturity of any government bond. It serves as a benchmark of long-term financing in the U.S. and an indicator of the direction of interest rates.
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Basic Types of Treasury Securities |
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Type |
Maturity |
Purchase Size |
Interest Paid |
Quotes |
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Treasury bills |
One year or less |
$100 up to $5 million |
None; price is discount to par |
Yield |
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Treasury notes |
Tw | |||