Treasury Notes

Price vs. Yield to Maturity

The price of a fixed-rate security depends on the relationship between its yield to maturity and the interest rate. If the yield to maturity (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. See an example of price vs. yield to maturity.

When purchasing a Treasury note, any interest accrued since the last interest payment is added to the note purchase price. At the next interest payment date the investor receives the full interest payment.

Use the following formula to figure accrued interest:

A = P x r (( d / t )/2) A = Accrued Interest
P = Face value
r = interest rate of Treasury note
d = # of days since last coupon payment
t = # of days in current coupon period

Example: A 5% 10-year note ($1,000 principal) is purchased 91 days after the last coupon payment. The current coupon period contains 182 days.

A = 1000 x .05 (( 91 / 182 )/2) , solving
A = $12.50

Methods of Purchase

Maturity Terms by Purchase Method:

Maturity Term TreasuryDirect Broker/Financial Institution TAAPS
2-Year Note Yes Yes Yes
3-Year Note Yes Yes Yes
5-Year Note Yes Yes Yes
7-Year Note Yes Yes Yes
10-Year Note Yes Yes Yes

Auction Frequency

For tentative auction dates, see the Tentative Auction Schedule (PDF), or for actual scheduled auction dates, see the Upcoming Treasury Marketable Securities Auctions. You may also sign up for e-mail notification for auctions.


Auction bids for Treasury securities may be submitted as noncompetitive or competitive.

To place a noncompetitive bid, individuals and various types of entities including trusts, estates, corporations, partnerships, etc. may use TreasuryDirect. See Learn More about Entity Accounts for full information on the registration types. Individuals, organizations, fiduciaries, and corporate investors may use a broker or other financial institution.

To place a competitive bid, a bidder must use a broker, financial institution, or have an established TAAPS account.

at a glance
Original issue rate: The yield determined at auction.
See rates in recent auctions
Minimum purchase: $100
Maximum purchase: Non-competitive: $5 million
Competitive: 35% of offering amount
(see types of bidding)
Investment increment: Multiples of $100
Issue method: Electronic

Redeem, Reinvest, or Sell

A Treasury note can be held to maturity or sold before it matures. If a note is held until it matures, the note's principal can be used to buy another security or the note can be redeemed. See more information on how to redeem, reinvest, or sell Treasury notes.

Tax Considerations

Interest on Treasury notes is exempt from state and local taxes but is subject to federal tax. See more information on tax considerations.