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U.S. Treasury obligations. Securities issued by the U.S. Treasury and backed by the <br /> full faith and credit of the United States. Treasuries are considered to have no credit <br /> risk, and are the benchmark for interest rates on all other securities in the US and <br /> overseas. The Treasury issues both discounted securities and fixed coupon notes and <br /> bonds. <br /> Treasury bills. All securities issued with initial maturities of one year or less are issued <br /> as discounted instruments, and are called Treasury bills. The Treasury currently <br /> issues three- and six -month Tbills at regular weekly auctions. It also issues "cash <br /> management" bills as needed to smooth out cash flows. <br /> Treasury notes. All securities issued with initial maturities of two to ten years are <br /> called Treasury notes, and pay interest semi - annually. <br /> Treasury bonds. All securities issued with initial maturities greater than ten years are <br /> called Treasury bonds. Like Treasury notes, they pay interest semi - annually. <br /> Volatility. The rate at which security prices change with changes in general economic <br /> conditions or the general level of interest rates. <br /> Yield to Maturity. The annualized internal rate of return on an investment which <br /> equates the expected cash flows from the investment to its cost. <br /> (Copyright 2011 by Chandler Asset Management, Inc. <br /> Notes: <br /> (1) Definition provided by the State of California regarding interest rates. <br />