In
US Fixed Income markets, a note is an instrument with a maturity of greater than one, but less than ten years.
Notes are - with the exception of their time to maturity - are identical to
bonds. Notes, unlike
discount instruments such as
bills, pay
interest at regular intervals. This is in addition to a pay of
principal received at the
maturity of the bond.
For example, one might purchase a
US Government issued 7 year bond, paying a 5%
coupon maturing in Jan 2007 for perhaps $950. Every six months the owner would then receive a
coupon payment of $25, followed by a final payment of $1,000 (the so-called
face value of the bond) at maturity.
See also
bill and
bond.