Association for Financial Professionals (AFP) Practice Exam

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What range of maturity do intermediate-term notes typically fall within?

  1. One to two years

  2. Two to ten years

  3. Ten to thirty years

  4. Less than one year

The correct answer is: Two to ten years

Intermediate-term notes are debt securities that typically have maturities ranging from two to ten years. This maturity range distinguishes them from short-term debt instruments, which usually mature in less than two years, and long-term debt instruments, which typically have maturities longer than ten years. By understanding the characteristics of intermediate-term notes, investors can position their portfolios to manage interest rate risk and financing needs effectively. The two to ten-year range is advantageous for those seeking a balance between yield and duration; it offers potentially higher yields than short-term securities while avoiding the higher volatility associated with longer-term bonds. This maturity range also allows for greater flexibility in financial planning, as it aligns with various investment horizons and cash flow requirements. Thus, the definition of intermediate-term notes as those with maturities between two and ten years is crucial knowledge for professionals working in finance.