The Comprehensive Guide to

Passive Income Investing

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What is a Note?

In the finance world, a note is debt.

How Does a Note Work?

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 Does a Note Matter?

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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Paul Tracy
Paul Tracy

Paul has been a respected figure in the financial markets for more than two decades. Prior to starting InvestingAnswers, Paul founded and managed one of the most influential investment research firms in America, with more than 3 million monthly readers.