Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Note

What it is:

In the finance world, a note is debt.

How it works (Example):

Notes are typically medium-term debt, but not always. For example, Treasury notes (T-notes) are intermediate-term bonds issued by the U.S. Treasury. They mature in two, three, five or 10 years.

You might hear people use the phrase "carry the note," which means to take on debt from another issuer. For example, let's say you plan to purchase a business for $2 million. You have only $200,000 in cash for the seller and want to pay the seller over time for the rest. Essentially, you're borrowing $1.8 million from the seller, and the seller is "carrying a note" until you pay back that $1.8 million.

Why it Matters:

There are many kinds of notes: municipal notes, Treasury notes, bank notes, promissory notes, etc. Like all debt, the terms vary, including the interest rates, face values, maturities and other provisions.

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