Note Auction

AAA

DEFINITION of 'Note Auction'

A formal bidding process that is scheduled on a regular basis by the U.S. Treasury. Currently there are 17 authorized securities dealers (primary dealers) that are obligated to bid on each issue. All Treasury notes are originally issued in this manner.

INVESTOPEDIA EXPLAINS 'Note Auction'

The amount of money bid by the highest bidder at these auctions will determine the interest rate paid on each issue. The primary dealers have the option of holding, selling or trading their issues after purchase. The demand for Treasury notes by these dealers will vary according to economic and market conditions.

RELATED TERMS
  1. Treasury Direct

    The online market where investors can purchase federal government ...
  2. Treasury Stock (Treasury Shares)

    The portion of shares that a company keeps in their own treasury. ...
  3. Sealed-Bid Auction

    A type of auction process in which all bidders simultaneously ...
  4. Treasury STRIPS

    An acronym for 'separate trading of registered interest and principal ...
  5. Treasury Bill - T-Bill

    A short-term debt obligation backed by the U.S. government with ...
  6. Treasury Note

    A marketable U.S. government debt security with a fixed interest ...
RELATED FAQS
  1. What does it mean when my broker says that shares are for auction?

    An auction market is one in which stock buyers enter competitive bids and stock sellers enter competitive offers at the same ... Read Full Answer >>
Related Articles
  1. Active Trading

    Buy Treasuries Directly From The Fed

    If you want government securities, go straight to the source. We'll show you how.
  2. Bonds & Fixed Income

    Auction Rate Securities: Bidding On The Long Run

    These investments do better with a long-term horizon. Should you buy them before they're going, going, gone?
  3. Investing Basics

    CDs or Bonds: Which Investment is Better For You

    When choosing between CDs and bonds, investors who seek to maximize their returns but also want a large measure of safety should consider the following:
  4. Bonds & Fixed Income

    Interested In West African Debt? Look Here First

    Promising high yields that the Eurozone and U.S. can't match, West African sovereign debt has caught the attention of savvy investors.
  5. Taxes

    10 Sources Of Nontaxable Income

    Taxes are often a deterrent from investing and saving. These financial practices will bring you no tax grief.
  6. Insurance

    Municipal Bond Tips For The Series 7 Exam

    Learn to distinguish between general obligation and revenue bonds to ace this test.
  7. Savings

    Time to Cash In Your U.S. Savings Bonds?

    If your U.S. Savings Bonds are dated 1984 or earlier, they've reached maturity and stopped paying interest. Cash them in pronto and put that money to work!
  8. Bonds & Fixed Income

    What Is A Municipal Bond?

    A municipal bond is a debt instrument used by a city, state, county or other local government authority to raise money for a project. Municipal bonds, often called munis, are considered a debt ...
  9. Bonds & Fixed Income

    A Look At National Debt And Government Bonds

    Learn the functions of the U.S. Treasury, and find out how and why it issues debt.
  10. Bonds & Fixed Income

    Introduction To STRIPS

    STRIPS provide an alternative form of bond for fixed-income investors who need definite cash flows at specific times. Read the article to find out how.

You May Also Like

Hot Definitions
  1. Fiat Money

    Currency that a government has declared to be legal tender, but is not backed by a physical commodity. The value of fiat ...
  2. Interest Rate Risk

    The risk that an investment's value will change due to a change in the absolute level of interest rates, in the spread between ...
  3. Income Effect

    In the context of economic theory, the income effect is the change in an individual's or economy's income and how that change ...
  4. Price-To-Sales Ratio - PSR

    A valuation ratio that compares a company’s stock price to its revenues. The price-to-sales ratio is an indicator of the ...
  5. Hurdle Rate

    The minimum rate of return on a project or investment required by a manager or investor. In order to compensate for risk, ...
  6. Market Value

    The price an asset would fetch in the marketplace. Market value is also commonly used to refer to the market capitalization ...
Trading Center