Treasury Index

AAA

DEFINITION of 'Treasury Index'

An index based on the auctions of U.S. Treasury bills, or on the U.S. Treasury's daily yield curve. It is commonly used in determining mortgage rates for mortgages with an unfixed component and as a performance benchmark for investors in the capital markets as it represents a rate of return that investors would be able to get from almost any bank, with minimal effort. Treasury indexes are proprietary. The calculations of treasury indexes and their components vary by the financial institution calculating the index.

INVESTOPEDIA EXPLAINS 'Treasury Index'

Components of a treasury index are likely to be the weighted average prices of five-year, ten-year and bond-futures contracts. Because the components have different investment time frames, each weighting, based on investment duration, is adjusted for equal contribution to the index.

RELATED TERMS
  1. Nasdaq

    A global electronic marketplace for buying and selling securities, ...
  2. Note Auction

    A formal bidding process that is scheduled on a regular basis ...
  3. Chicago Board Of Trade - CBOT

    A commodity exchange established in 1848 that today trades in ...
  4. Yield Curve

    A line that plots the interest rates, at a set point in time, ...
  5. Futures

    A financial contract obligating the buyer to purchase an asset ...
  6. U.S. Treasury

    Created in 1798, the United States Department of the Treasury ...
Related Articles
  1. To Rent Or Buy? There's More To It Than ...
    Personal Finance

    To Rent Or Buy? There's More To It Than ...

  2. To Rent Or Buy? The Financial Issues
    Home & Auto

    To Rent Or Buy? The Financial Issues

  3. Understanding Your Mortgage
    Personal Finance

    Understanding Your Mortgage

  4. The Money Market
    Retirement

    The Money Market

comments powered by Disqus
Hot Definitions
  1. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  2. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  3. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  4. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Odious Debt

    Money borrowed by one country from another country and then misappropriated by national rulers. A nation's debt becomes odious ...
Trading Center