Bonds are IOUs issued by borrowers to lenders. These instruments come in various forms and are typically used by governments, local authorities, or companies to raise funds, offering fixed or variable interest rates and different terms.
In financial and legal contexts, 'cancel' refers to the act of voiding a negotiable instrument by annulling or settling it, prematurely terminating a bond or other contract, or voiding an order to buy or sell securities.
Debt is an amount of money borrowed by one party from another, which is often incurred by businesses and individuals to finance specific activities or projects.
A discount bond is a bond sold for less than its face value or par value. When the bond matures, the investor receives the face value of the bond. Discount bonds can be treasury, municipal, corporate, etc. They offer a way for the issuer to raise capital by selling at a reduced price.
A distress sale occurs when assets, such as property, stocks, bonds, mutual funds, or futures positions, are sold urgently, often at a loss, due to immediate financial pressure.
Hybrid Financial Instruments are synthetic financial instruments formed by combining two or more individual financial instruments, such as a bond with a warrant attached. They blend features of both debt and equity, providing the benefits of both categories.
Positive carry is a financial situation in which the cost of borrowing money to finance an investment is lower than the yield earned from that investment.
A prepayment clause is a provision in a bond or mortgage that allows the borrower to pay off the loan before its scheduled due date. In some cases, there may be penalties for prepayment, such as the waiver of interest that is not yet due.
Redeeming refers to various financial and legal acts of reclaiming or repurchasing something, such as cashing in a maturing note, bond, or curing a mortgage default.
A seasoned loan is a bond or mortgage on which several payments have been collected. These types of loans are considered lower risk and more marketable than newly issued loans.
A secured bond is a type of bond backed by some form of collateral such as a mortgage or other lien. The specifics of the security are detailed in the bond agreement, known as an indenture. Unlike secured bonds, debentures (unsecured bonds) are not backed by collateral.
A multifaceted concept in finance and legal agreements, referring to either the period during which conditions of a contract will be carried out or the specific provisions within an agreement.
A Variable-Rate Note (VRN) is a type of bond with adjustable interest coupons set at regular intervals, reflecting the prevailing market rates.
A zero coupon bond is issued at a discount and matures at its face value, paying no interest during its life. It is a deep discount bond and offers a unique investment opportunity.
