SIE practice questioneasyTreasury Notes and Bonds
What distinguishes Treasury notes from Treasury bonds?
- ANotes are backed by specific collateral; bonds are backed by full faith and credit
- BNotes are exempt from federal taxes; bonds are not
- CNotes have maturities of 2-10 years; bonds have maturities greater than 10 years✓ Correct answer
- DNotes are issued at a discount; bonds pay semiannual interest
Explanation
Why C — Notes have maturities of 2-10 years; bonds have maturities greater than 10 years
Treasury notes have maturities of 2-10 years, while Treasury bonds have maturities greater than 10 years (typically 20 or 30 years). Both pay semiannual interest, are backed by the full faith and credit of the U.S. government, and are subject to federal tax but exempt from state and local taxes.
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