A zero-coupon convertible bond is a convertible bond issued by a corporation that does not pay regular interest to the bondholders.
Due to the zero coupon feature, these convertible bonds are sold at a discount and will instead be redeemed to face value if they are not converted before the maturity date.
However, zero-coupon convertible bonds prior to conversion are still favorable to investors in the event of bankruptcy, as bondholders have redemption priority over shareholders.
As a result, these two functions tend to balance each other in terms of risk and reward for investors, although these securities can be quite difficult to accurately evaluate.
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.
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.
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.
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.
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.