Which of the following best describes U.S. Treasury notes?

U.S. Treasury notes are indeed best described as instruments with initial maturities ranging from one to ten years. However, the context of the choices simplifies this understanding. Among the options provided, the characterization that aligns most closely with U.S. Treasury notes would refer to option C, as it accurately represents the range in question, focusing specifically on the shorter end of their maturity spectrum, which starts at one year.

The mention of "instruments with initial maturities from one to five years" captures the essence of Treasury notes since they typically have maturities of two, three, five, seven, and ten years, although the core idea presented in option C emphasizes that they begin at one year, which is correct. This means Treasury notes provide a relatively longer investment period compared to Treasury bills and other short-term instruments, which would have been represented in the other options.

Treasury bills, for example, are short-term securities that usually have maturities of one year or less, while Treasury notes do not fall within that definition. Therefore, option C reflects an accurate understanding of what Treasury notes are while distinguishing them from short-term Treasury obligations like bills.