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The yield-based method specifies the price of a fixed income security (such as a bond) as a percentage of yield rather than in dollars. The yield-based method helps bond buyers to easily compare the characteristics of different bonds before making a purchase. A yield quote tells a bond trader whether a bond is currently trading at a discount or premium compared to other bonds. Buying a bond on a net yield basis means that the income also includes the broker’s profit or trade execution premium. Accretion of Discount
September 25, 2022 Increasing discount refers to an increase in the value of a discount security as it approaches its maturity date. Average Life
September 25, 2022 Average life is the average length of time it takes to pay off the outstanding principal on a debt instrument, such as a treasury bill, bond, loan, or mortgage-backed security. Humped Yield Curve
September 25, 2022 A humped yield curve occurs when medium-term interest rates are higher than both short-term and long-term rates. Liquidity Preference Theory
September 25, 2022 Liquidity preference theory refers to the demand for money as measured by liquidity. Negative Arbitrage
September 25, 2022 Negative arbitrage is the lost profits of holding debt proceeds in escrow until the project can actually be funded. Reinvestment Rate
September 25, 2022 The reinvestment rate is the return that an investor expects to receive after reinvesting cash flows received from previous investments. Workout Period
September 25, 2022 An adjustment period occurs when the price or yield of a bond is adjusted so that it is more in line with similar bonds in the market. Zero-Coupon Convertible
September 25, 2022 A zero-coupon convertible bond is a convertible bond issued by a corporation that does not pay regular interest to the bondholders. Agency Bond
September 25, 2022 Federal government bonds and government-sponsored corporate bonds pay slightly higher interest rates than US Treasury bonds. Baby Bond
September 25, 2022 A baby bond is a bond with a par value of less than $1,000. Barbell
September 25, 2022 Barbell is a portfolio strategy with a fixed income, in which half of the investments are short-term instruments, and the other half are long-term. Bearer Bond
September 25, 2022 A bearer bond is a physical certificate with coupons attached that is used to pay off interest payments. Bond Covenant
September 25, 2022 The Bond Agreement establishes certain actions to be taken or prohibited by the bond issuer. Bond Rating Agencies
September 25, 2022 Bond rating agencies are companies that assess the creditworthiness of both debt securities and their issuers. Bondholder
September 25, 2022 A bondholder is an investor who purchases bonds issued by an entity such as a corporation or government agency. Debt Security
September 25, 2022 Debt securities are financial assets that entitle their holders to a stream of interest payments. Dim Sum Bond
September 25, 2022 A dim sum bond refers to a yuan-denominated bond issued in Hong Kong, which is a relatively autonomous region of China. Discount
September 25, 2022 In fixed income trading, a discount occurs when the price of a bond trades below its par or face value, Floating Charge
September 25, 2022 A floating fee is a security interest or lien over a group of non-permanent assets that fluctuate in quantity and value. Hard Call Protection
September 25, 2022 Hard call protection or absolute call protection is a condition of a callable bond, according to which the issuer cannot exercise the call and redeem the bond before a specified date, usually three to five years from the date of issue. Harmless Warrant
September 25, 2022 A harmless warrant is a provision that requires the holder of a bond to return the bond to the issuer if he buys another bond with similar terms from the same issuer. High-Yield Bond Spread
September 25, 2022 The high yield bond spread, also known as the credit spread, is the difference between the yield on a high yield bond and a benchmark bond such as an investment grade or treasury bond. International Bond
September 25, 2022 An international bond is a debt instrument issued in a country by a foreign legal entity in its national currency. Japanese Government Bond (JGB)
September 25, 2022 Japanese government bonds (JGB) are bonds issued by the Japanese government that have become a key element in the country’s central bank’s efforts to boost inflation. Joint Bond
September 25, 2022 A joint bond or joint bond is a type of bond that is guaranteed by at least two parties.