Treasury Note Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Treasury Note, written in plain English, along with examples of how it is used.
What is Treasury Note?
It is a promissory note issued by the US treasury for a period of one to five years.
History and Meaning of Treasury Note
A treasury note is a type of financial instrument that the US government issues to raise money to finance various projects, such as building infrastructure or funding the military. Treasury notes have a maturity period of one to five years, and they pay interest to investors in regular installments over their term.
The earliest versions of treasury notes date back to the early days of the United States. The government issued bonds during the Revolutionary War to finance the war effort, and these bonds were essentially a form of treasury note. Treasury notes became more common during the Civil War when the government needed money to fund the Union effort. Since then, notes have been issued and reissued many times over the years to fund various projects.
Examples of Treasury Note
- Joe buys a $10,000 treasury note with a maturity period of three years. The note pays 2% interest per year, paid in quarterly installments.
- Sally invests in a five-year treasury note that has a face value of $50,000. The note pays 3% interest per year, paid semi-annually.
- Mark buys a one-year treasury note with a face value of $5,000. The note pays 1.5% interest and is payable at maturity.
Legal Terms Similar to Treasury Note
- Treasury bill - A short-term government debt security with a maturity period of less than one year.
- Treasury bond - A government debt security with a maturity period of more than ten years.
- Municipal note - A debt security issued by a state or local government to finance short-term projects.