If I buy a 10 yr treasury note, say 5.25% and then sell it in 1 yr. Is my return same as buying 1 yr bond?

Assuming interest rates don't change throughout the entire period. I just want to know if holding a 10-year note for only 1 year period is equivalent to buying a 1-year bond. So if 10 year note is yielding 5.25% and 1 year bond is yielding 4.7%, for a 1 year period investment, would both instruments have the same yield? I would think so.

Answer is NO

Bond yield is directly tied to the perceived risk from the market. While it is accurate that for a government treasury note is most sensitive to interest rate, elimination of interest risk does not make bonds equal to each other.

Liquidity risk is something to consider (tying up your money for 10 years as opposed to having it free after 1 year). Transaction cost should also be considered (redeeming the 1 yr bill while you incur broker fees for selling the 10 yr note).

There are other risks, just can't name it off the top of my head. Basically, yields have to be higher to compensate for risk. In your dreamed scenario which interest rates don't change, the 10 yr note will still yield higher than the 1 year bill because investors want to be compensated for liquidity.

i would not think so.

i think there would be a penalty for not waiting for the note to mature. I would go with the one year note if i thought there was a possibility that i might want to cash it in a year. or maybe just rotate 3 month notes until i feel secure enough in the notes to go to a year and then to 3 year and then to 10 year.

the u.s. treasury has a website where you should be able to get many of your questions answered.

It depends on what the interest rates do between now and one year. If rates go up you will be worse off and if they go down it will be good. It will also depend on the bond market and forecasts at that time. You'd prolly just be better off by buying the 1-year.