Home  Top Stories  Sports  Entertainment  Health News  Business  Personal Finance 
Real Estate  Business Finance  Insurance  Consulting 
Tax News  Forum


 

Writers






 


Featured Articles







BUSINESS



 



 
 
125x125 $10 off $75 Off Coupon - All Stores

 

 



What you Need to Know about Treasury Notes - How to Buy Sell these Securities

February 1st 2006

What you Need to Know about Treasury Notes - How to Buy Sell these Securities

Early Note

The United States Government offers several methods of investing.  Investors can buy Treasury Bills, Treasury Notes and Bonds.  This article will focus on Treasury Notes.  These Notes earn a fixed rate of interest every six months until maturity.

Treasury Notes are issued for 2, 3, 5 and 10 year terms. Notes can be purchased from the U.S. government through their TreasuryDirect and Legacy Treasury Direct programs.  Treasury Notes can also be purchased through banks and brokers.

Only individuals are allowed to hold TreasuryDirect accounts.  Notes can be held until maturity or can be sold before that point.  You can buy these through either the competitive or noncompetitive bidding process.

 

The bidding process is operated in two ways.  You can place a noncompetitive bid by agreeing to accept the yield determined at auction.  With this process you are guaranteed “to receive the note you want, and in the full amount you want”, according to the US Treasury. 

You may also consider purchasing Notes through the competitive process.  Here you specify the yield you are willing to accept.  Your bid may or may not be accepted if your yield is higher than that set at auction.  The Treasury may accept your bid in the full amount you want if your bid is less than the yield determined at auction.  Your bid may also be accepted in less than the full amount you want if your bid is equal to the high yield.

If you want to place a competitive bid you must use a bank, broker or dealer.  Non-competitive bids can be placed through TreasuryDirect, Legacy Treasury Direct, a bank, broker or dealer.  The yields will always be determined at auction.   

Treasury Notes are priced greater than, less than, or equal to the face value of the note.  They are always sold in increments of $1,000. 

 

Auctions for 2 and 5 year Notes are held every month.  For 3-year Notes the auctions are held in February, May, August and November.  For 10-year Notes, they are held in the same months with “reopeneings” held in March, June, September and December.  According to the Treasury Department, additional amounts of a previously issued security are sold.  These reopened securities have the same maturity date and interest rate as the original security, but the reopened security has a different purchase price and issue date. 

You can buy up to $5 million in Notes using the non-competitive bidding process.  Treasury Notes pay a fixed rate of interest every six months.  When the Note matures you are paid face value.

The price of a fixed rate security depends on its yield to maturity (YTM) ratio and the interest rate.  If the YTM is greater than the interest rate, the price will be less than par value; if the YTM is equal to the interest rate, the price will be equal to par; if the YTM is less than the interest rate, the price will be greater than par.  For more information on this subject you may wish to consult your financial planner or broker.
 
 
Comment on this Article at our Forum

Submit your own Article

Finance News Special Topic

  RSS Finance News Feed

  RSS Feed to our Business News

  RSS Feed to all of our News

Add to Google Add to My AOL
Add to My Yahoo! Subscribe with Pluck RSS reader
Subscribe in NewsGator Online
Add this feed to Your C-Net

By Dan Wilson
Best Syndication Staff Writer

Books on Investing

Keywords and misspelling: investmint investing intesters socks


Google
 
Web BestSyndication.com

About   Contact   site map

Copyright 2005 Best Syndication                                     Last Updated Saturday, July 10, 2010 09:48 PM