Future Business Leaders of America (FBLA) Agribusiness Practice Test

What distinguishes treasury notes from other treasury securities?

1. They are longer-term investments with higher risk

2. They usually have lower returns compared to bonds

3. They are low risk with large amounts of funds

4. They have no maturity dates

The correct answer is: They are low risk with large amounts of funds

Treasury notes are distinguished by their low risk and the fact that they are issued in large denominations. They are government securities with maturities ranging from two to ten years, providing a fixed interest rate to investors. This makes them a stable and secure investment option, particularly appealing to risk-averse investors. The low risk associated with treasury notes stems from the backing of the U.S. government, which is considered to have a very low likelihood of default compared to other types of securities. Additionally, treasury notes specifically differ from treasury bonds, which are longer-term investments, and treasury bills, which are short-term securities. The unique maturity range of treasury notes provides investors with the opportunity to match their investment horizon with their financial needs, making them a flexible option within the broader category of treasury securities. The combination of low risk and the potential for more moderate returns over a medium-term horizon is a significant selling point for these securities.