Baby bonds are low-denomination bonds that make it easier for small investors to participate in the bond market. They are generally worth $5,000 or less and were originally coined to make investing more accessible.
Bond yield refers to the return an investor realizes on a bond. Various types of bond yields provide investors with insight into the return they could potentially receive if they hold the bond until maturity or sell it earlier.
Bonded debt refers to the portion of a corporation's or government's overall debt that is represented by bonds it has issued. It specifically concerns the indebtedness that is contracted under the obligation of these bonds.
A Certificate of Accrual on Treasury Securities, or CATS, is a type of U.S. Treasury security that primarily appealed to income investors for its deep discount and attractive eventual yield.
A bond issued with detachable coupons that need to be presented to a paying agent or the issuer to receive semiannual interest payments. These are bearer bonds, meaning the interest is payable to whoever holds the coupon.
Dragon bonds are foreign bonds issued in the Asian bond markets, designed to tap into the growing pool of Asian investors.
The Face Amount of a Bond represents the nominal or principal amount that the issuer agrees to pay the bondholder at maturity.
In finance, a long coupon refers to the first interest payment of a bond issue, which covers a longer period than the subsequent payments or an interest-bearing bond maturing in more than 10 years.
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A redeemable bond, also known as a callable bond, is a type of bond that the issuer can redeem before its maturity date at a predefined call price.
The redemption date refers to the specific date on which a bond or other fixed-income security is repaid by the issuer, fulfilling the terms of the debt agreement.
Redemption yield, also known as yield to maturity, is a measure of the annual return an investor can expect to earn if a bond is held until maturity. It factors in both the bond's current market price and its interest payments.
A bond issued in a primary market at a price exceeding 90% of its face value, meaning the discount does not surpass 10%. Such bonds are typically seen as less risky compared to more deeply discounted bonds.
Staggering Maturities is a technique used by bond investors to lower risk by diversifying investments across bonds with varying maturities. This approach helps in hedging against interest rate movements and mitigating the volatility associated with long-term bonds.
A tap stock, also known as a 'tap issue' or 'tap security,' is a gilt-edged security reissued in the market when its price reaches a pre-determined level. There are 'short taps' and 'long taps' depending on their maturity dates.
A Treasury Bond (T-Bond) is a long-term debt instrument issued by the U.S. government, as well as a term for bonds bought back by corporations.
Yield to Call (YTC) refers to the yield on a bond or other fixed-income security assuming that the bond will be redeemed by the issuer at the first call date specified in the indenture agreement. YTC is particularly important for callable bonds, as it helps investors gauge the potential return if the bond is called before maturity.
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.
