2.32% / 4. And hopefully that answers your second question as well. The rate is annualized, meaning the profit if you held the bond for 1 year. So a 3 year b

2.32% / 4. And hopefully that answers your second question as well. The rate is annualized, meaning the profit if you held the bond for 1 year. So a 3 year bond at 2.32% pays a 2.32% annual interest rate. Interest payments are made twice a year. A 5 year bond at 2.32% pays the same rate of return — 2.32% interest per year, but in that case guaranteed to continue paying at the same rate for 5 years instead of 3. The rate is the annual rate. The term is for how long interest payments are made and how long until the bond “matures” — when the face value is paid back. If people think rates are going to go down in the future, then they will accept a slightly lower rate if it is locked in for a longer term, which is the idea behind the “inversion”.