A marketable U.S. government debt security with a fixed interest rate and a maturity between one and 10 years. Treasury notes can be bought either directly from the U.S. government or through a bank. When buying Treasury notes from the government, you can either put in a competitive or noncompetitive bid. With a competitive bid, you specify the yield you want; however, this does not mean that your bid will be approved. With a noncompetitive bid, you accept whatever yield is determined at auction. |||Treasury notes are extremely popular investments as there is a large secondary market that adds to their liquidity. Interest payments on the notes are made every six months until maturity. The income for interest payments is not taxable on a municipal or state level but is federally taxed.
A customized derivative security used by investors to lock in the yield or price of a treasury security. |||The lock acts like a separate security in addition to the treasury because it guarantees a fixed return. Treasury locks are cash settled, and the parties involved, depending on their respective side of the transaction, pay the difference between the lock price and the market interest rates. For example, an investor purchasing a treasury lock at 5% is required to pay the seller the difference between the market interest rate and the lock rate if the market rate is higher. Conversely, if the market rate is lower than the lock price, then the investor will receive the difference.
The return on investment, expressed as a percentage, on the debt obligations of the U.S. government. Treasuries are considered to be a low-risk investment because they are backed by the full faith and credit of the U.S. government, which includes the government’s authority to raise taxes to cover its obligations. Because of their low risk, treasuries have a low return compared to many other investments. |||The different types of U.S. treasuries include treasury notes, treasury bills and treasury bonds, which come in different maturities up to 30 years. Each has a different yield, and the U.S. treasury publishes the yields for all of its securities daily on its website.
An acronym for 'separate trading of registered interest and principal securities'. Treasury STRIPS are fixed-income securities sold at a significant discount to face value and offer no interest payments because they mature at par. |||Backed by the U.S. government, STRIPS, which were first introduced in 1985, offer minimal risk and some tax benefits in certain states, replacing TIGRs and CATS as the dominant zero-coupon U.S. security.Although you receive no tangible income, you typically still have to pay federal income tax on the bond's accretion for the year.
A zero-coupon bond issued by a brokerage firm and collateralized by treasury securities held for the investor by a custodian. |||In general, stripped U.S. Government bonds are referred to as Treasury receipts but are better known as TIGRS (Treasury Investment Growth Receipts), CATS (Certificates of Accrual on Treasury Securities), etc.
An adjustment in the current amount of reportable interest on a U.S. savings bond. In some cases, the taxpayer has already reported some of the interest that was earned and must therefore reduce the current amount of taxable interest. The U.S. Savings Bond adjustment is therefore allowed to avoid double taxation of the same income. |||There are many rules pertaining to the taxation of U.S. Savings bonds. For more information, visit www.treasurydirect.gov or www.publicdebt.treas.gov. The adjustment described above applies to all types of U.S. savings bonds.
Notice of the release merchandise to a buyer from a bank, with the bank retaining the ownership title to the released assets. In an arrangement involving a trust receipt, the bank remains the owner of the merchandise, but the buyer is allowed to hold the merchandise in trust for the bank, for manufacturing or sales purposes. |||The buyer of merchandise subject to a trust receipt is required to maintain the merchandise, and any proceeds’ of the sale of the merchandise, for remittance to the bank. In this way, the buyer is permitted use of the merchandise for their business activities, but the bank's interest in the ownership of the merchandise is protected.
A security similar to debentures and preferreds that is generally longer term, has early redemption features, makes quarterly fixed interest payments, and matures at face value. |||TruPS have been created by companies for their favorable accounting treatments and flexibility. Specifically, these securities are taxed like debt obligations by the IRS while maintaining the appearance of equities in a company's accounting statements as according to GAAP procedures.