T-Notes mature in two to ten years and offer a coupon or interest payment every six months. The 10 year T-Note is the Treasury most often quoted in discussions about the bond market.

A debt owed by the United States government for a period of ten years. Each note has a stated interest rate, which is paid semi-annually. Because the United States is seen as a very low-risk borrower, many investors see 10-year Treasury Note interest rates as indicative of the wider bond market. Normally, the interest rate decreases with greater demand for the Notes and rises with lower demand.

For example, in December 2008, 10-year interest rates were the lowest in history due to deteriorating economic conditions and the consequent desire of investors for low-risk investments.

Yield is the measure used most frequently to estimate or determine a bond's expected return. Yield is also used as a relative value measure between bonds

A bond's yield relative to the yield of its benchmark is called a spread. The spread is used both as a pricing mechanism and as a relative value comparison between bonds.

For example, a trader might say that a certain corporate bond is trading at a spread of 75 basis points above the 10-year Treasury.

This means that the yield to maturity of that bond is 0.75% greater than the yield to maturity of the on-/the-run 10-year Treasury.

If a different corporate bond with the same credit rating, outlook and duration was trading at a spread of 90 basis points on a relative value basis, the second bond would be a better buy.

Bonds typically return a higher percentage rate (or yield) if they have more time until maturation.

Another way of thinking of this is that people want a higher interest rate if they are going to lend money for longer. A longer term loan involves more risk that the borrower will default, or that interest rates will change, or that the lender will find a better potential use for their money. In our everyday lives this manifests as cheaper loan rates for a 15 year mortgage versus a 30 year mortgage, for example.

A chart of these rates (known as yields) forms a curve and is known as a yield curve

A bond is basically debt with interest. The difference between a bond and a direct loan is that a bond is easily traded in standard unit sizes and typically the bond has a standard contract form.

Bond as Fixed Income

Bonds are commonly referred to as fixed-income securities and are one of the three main asset classes, along with stocks and cash equivalents.

A way for corporations to raise funds is to issue bonds to whoever wants to buy them. In simply words, bond is a loan. When you buy a bond, you're lending money to the organization that issues it. The company, in return, promises to pay interest payments to you for the length of the loan