Financial Terms related to Bond This document is part of the valuable contents   available at www.ftpall.com, a free onlin...
www.ftpall.com                     2|Page  • Is a security which does not have the owners name on the certificate. Interes...
www.ftpall.com                      3|Page   government, local governments, water districts, companies and many other type...
www.ftpall.com                     4|Page   eurodollars to a bond standard. It is typical for discounted paper to be compu...
www.ftpall.com                     5|Page   of its face, or par value.Bond quote   • One of a number of quotations listed ...
www.ftpall.com                     6|Page   • A system that monitors and evaluates the performance of a fixed-income portf...
www.ftpall.com                      7|Page   specified call price.Century bonds   • Are securities with a maturity equal t...
www.ftpall.com                     8|Page   takeovers or call options in favor of the issuer. Generally, convertible bonds...
www.ftpall.com                     9|Page         Intermediate Corporates,         Distressed Securities,         Junk ...
www.ftpall.com                      10 | P a g e   par value. When the bond has no coupon, its called a zero coupon bond. ...
www.ftpall.com                      11 | P a g e   jurisdiction of any single country.   • Bonds issued in Europe outside ...
www.ftpall.com                     12 | P a g e   • bonds where the stated interest rate is adjusted periodically within s...
www.ftpall.com                      13 | P a g e   of the issuing unit rather than the revenue from a given project.   • M...
www.ftpall.com                      14 | P a g e   bonds are commonly used during the reorganization of a failed or failin...
www.ftpall.com                       15 | P a g e   • Are investment grade notes and bonds issued by corporations. The mat...
www.ftpall.com                     16 | P a g e   Services, provide the rating systems for companies credit.   • Bond purc...
www.ftpall.com                      17 | P a g e   • A bond in which the issuer has granted the bondholders a lien against...
www.ftpall.com                      18 | P a g ePositive covenant of a bond   • A bond covenant that specifies certain act...
www.ftpall.com                     19 | P a g e   • Abbreviated RRB. Bonds that adjust the semi-annual coupon payments and...
www.ftpall.com                     20 | P a g e   are sometimes viewed as more risky than General Obligation (GOs) Bonds. ...
www.ftpall.com                     21 | P a g eSeries hh bond   • A nonmarketable, interest-bearing U.S. government saving...
www.ftpall.com                         22 | P a g e   • The price at which a convertible bond would sell in the market wit...
www.ftpall.com                      23 | P a g eT bond   • See Treasury Bond.Term bond   • A bond issue in which all bonds...
www.ftpall.com                      24 | P a g eVariable rated demand bond vrdb   • Floating rate bond that can be sold ba...
www.ftpall.com                     25 | P a g e   • Is a security which the interest and/or principal has been discounted ...
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Bond

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Bond

  1. 1. Financial Terms related to Bond This document is part of the valuable contents available at www.ftpall.com, a free onlineglossary with more than five thousand financial and business terms. This document can be copied and distributed freely Find thousands of financial terms at www.ftpall.com respecting its original format. It is forbidden its transcription, translation or change on its format without authorization of its author or editor.BONDAccrual bond • A bond on which interest accrues, but is not paid to the investor during the time of accrual. The amount of accrued interest is added to the remaining principal of the bond and is paid at maturity.Baby bonds • Are bonds which have denominations less than $1,000 per bond.Ban or bond anticipation note • Is a short term security issued by a municipality. The security will be paid or redeemed by funds from a new issue. It is a cash management tool.Bearer bond
  2. 2. www.ftpall.com 2|Page • Is a security which does not have the owners name on the certificate. Interest and principal are paid to the person presenting the attached coupons to the agents for payment. This type of ownership compares to registered or book entry form. • Bonds that are not registered on the books of the issuer. Such bonds are held in physical form by the owner, who receives interest payments by physically detaching coupons from the bond certificate and delivering them to the paying agent. • Bonds for which payments are made to the bearer.Bond Find thousands of financial terms at www.ftpall.com • The term bond refers to long-term debt of companies or governments. • A formal certificate of debt, issued by corporations or units of government. • Long-term debt instrument used by business and government to raise large sums of money, generally from a diverse group of lenders. In the case of business bond issuers, a specific asset or assets are pledged as collateral. • A bond is essentially a loan made by an investor to a division of the government, a government agency, or a corporation. The bond is a promissory note to repay the loan in full at the end of a fixed time period. The date on which the principal must be repaid is the called the maturity date, or maturity. In addition, the issuer of the bond, that is, the agency or corporation receiving the loan proceeds and issuing the promissory note, agrees to make regular payments of interest at a rate initially stated on the bond. Interest from bonds is taxable based on the type of bond. Corporate bonds are fully taxable, municipal bonds issued by state or local government agencies are free from federal income tax and usually free from taxes of the issuing jurisdiction, and Treasury bonds are subject to federal taxes but not state and local taxes. Bonds are rated according to many factors, including cost, degree of risk, and rate of income. • Bonds are debt and are issued for a period of more than one year. The U.S.
  3. 3. www.ftpall.com 3|Page government, local governments, water districts, companies and many other types of institutions sell bonds. When an investor buys bonds, he or she is lending money. The seller of the bond agrees to repay the principal amount of the loan at a specified time. Interest-bearing bonds pay interest periodically. • A legal obligation of an issuing company or government to repay the principal of a loan to bond investors at a specified future date. Bonds are usually issued with a Par or face value of $1,000, representing the amount of money borrowed. The issuer promises to pay a percentage of the par value as interest on the borrowed funds. Find thousands of financial terms at www.ftpall.com The Interest payment is stated on the face of the bond at issue.Bond agreement • A contract for privately placed debt.Bond arbitrage hedge funds • Try to capture interest rate differentials or spreads due to mispricing or better financing than general market participants can attain. Sometimes, there can be a yield pickup due to convergence between two instruments, a pricing discrepancy due to inefficient evaluations of senior and junior credit risks, or relative value differences.Bond covenant • A contractual provision in a bond indenture. A positive covenant requires certain actions, and a negative covenant limits certain actions.Bond equivalent basis • The method used for computing the bond-equivalent yield.Bond equivalent yield • The annualized yield to maturity computed by doubling the semiannual yield. • Is the procedure which relates discounted rates such as treasury bills and
  4. 4. www.ftpall.com 4|Page eurodollars to a bond standard. It is typical for discounted paper to be computed on the basis of a 360-day year whereas bonds are usually based on a 365 day year. If this equivalency is not done then the quoted short-term rates for discounted instruments may be understated. • Bond yield calculated on an annual percentage rate method. Differs from annual effective yield.Bond fund • A mutual fund whose investment objective is to provide stable income with a Find thousands of financial terms at www.ftpall.com minimal capital risk. It invests in income-producing instruments, which may include corporate, government or municipal bonds. See also: Mutual Fund. • A fund that holds municipal, corporate, and/or government bonds. • Are mutual funds that invest in credit instruments. There can be distinctions, such as, treasury, international, sovereign, mortgage backed, investment grade corporate and high yield or junk bonds.Bond indenture • A complex and lengthy legal document stating the conditions under which a bond has been issued. • The contract that sets forth the promises of a corporate bond issuer and the rights of investors.Bond indexing • Designing a portfolio so that its performance will match the performance of some bond index.Bond points • A conventional unit of measure for bond prices set at $10 and equivalent to 1% of the $100 face value of the bond. A price of 80 means that the bond is selling at 80%
  5. 5. www.ftpall.com 5|Page of its face, or par value.Bond quote • One of a number of quotations listed in the financial press and most daily newspapers that provide representative bid prices from the previous days bond market. Quotes for corporate and government bonds are percentages of the bonds face value (usually $1,000). Corporate bonds are quoted in increments of 1/8th, where a quote of 99 1/8 represents 99.125% of par ($1,000), or $991.25. Government bonds are quoted in 1/32nds. Municipal Bonds may be quoted on a Find thousands of financial terms at www.ftpall.com dollar basis or on a yield-to-maturity basis. See also: Quotation; Stock Quote.Bond rating • Denotes the safety of the bonds. Probability of default generally increases as the bond ratings decline. Bottom falls out as we go to below investment grade bonds. The highest bond rating is AAA followed by AA, A, and BBB. The lowest investment quality bond rating is BBB. All ratings below BBB are junk bonds. These are BB, B, and CCC. D denotes bonds that have already defaulted. • An evaluation of the possibility of default by a bond issuer, based on an analysis of the issuers financial condition and profit potential. Bond rating services are provided by, among others, Standard & Poors 500, Moodys Investors Service and Fitch Investors Service.Bond refunding decision • The decision facing firms, when bond interest rates drop, whether to refund (refinance) existing bonds with new bonds at the lower interest rate.Bond value • With respect to convertible bonds, the value the security would have if it were not convertible apart from the conversion option.Bondpar
  6. 6. www.ftpall.com 6|Page • A system that monitors and evaluates the performance of a fixed-income portfolio, as well as the individual securities held in the portfolio. BONDPAR decomposes the return into those elements beyond the managers control--such as the interest rate environment and client-imposed duration policy constraints--and those that the management process contributes to, such as interest rate management, sector/quality allocations, and individual bond selection.Brady bonds • These are issued in conjunction with defaulted Latin American sovereign debt. Find thousands of financial terms at www.ftpall.com Named after a Treasury secretary, Nicholas Brady. Brady bonds are debt-for-debt swaps. • Bonds issued by emerging countries under a debt reduction plan.Bull bear bond • Bond whose principal repayment is linked to the price of another security. The bonds are issued in two tranches: in the first tranche repayment increases with the price of the other security, and in the second tranche repayment decreases with the price of the other security.Bulldog bond • Foreign bond issue made in London.Call price bond • The stated price at which a bond may be repurchased, by use of a call feature, prior to maturity.Callable bond • A bond that can be redeemed by the issuer prior to its Maturity. Usually a premium is paid to the bond owner when the bond is called. • A bond that the issuer has the right to redeem prior to maturity by paying some
  7. 7. www.ftpall.com 7|Page specified call price.Century bonds • Are securities with a maturity equal to 100years.Collateral trust bond • A bond in which the issuer (often a holding company) grants investors a lien on stocks, notes, bonds, or other financial asset as security. Compare mortgage bond. • Is a security issued by a corporation and is secured by other securities. This bond Find thousands of financial terms at www.ftpall.com compares to Mortgage Backed Securities which are secured by real property or unsecured bonds. Depending on the underlying collateral and the terms of the issue, these bonds can offer somewhat better financing rates to the issuer.Completion bonding • Insurance that a construction contract will be successfully completed.Conflict between bondholders and stockholders • These two groups may have interests in a corporation that conflict. Sources of conflict include dividends, distortion of investment, and underinvestment. Protective covenants work to resolve these conflicts.Convertible bond • A bond containing a provision that permits conversion to the issuers common stock at the option of the bond holder at some fixed exchange ratio. Bondholder will only convert when stock prices have increased above the conversion price (break- even price). • Bonds that can be converted into common stock at the option of the holder. • Is a credit instrument which is convertible into equity. Usually, this conversion is done at the discretion and exercise of the bond holder and not the corporation. However, there may be forced conversions due to stipulated events such as
  8. 8. www.ftpall.com 8|Page takeovers or call options in favor of the issuer. Generally, convertible bonds are coupons paying but there are zero coupon convertible bonds as well. These bonds tend to have lower-than-market rates of interest in exchange for a potential equity stake for the bondholder. • A bond that can be changed into a specified number of common shares at the option of the bondholder.Convertible eurobond • A eurobond that can be converted into another asset, often through exercise of Find thousands of financial terms at www.ftpall.com attached warrants.Corporate bond • This is the public debt (IOU) of corporations. Instead of taking a bank loan, corporations can directly borrow from institutions or individuals by selling them bonds. They pay interest with coupons attached to the bonds. They usually have long lives such as 20 or 30 years. They come in denominations of $l,000 and pay interest every 6 months. • A Debt Security issued by a corporation. A corporate bond typically has a par value of $1,000, is taxable, has a term maturity, and is traded on a major exchange. • A certificate indicating that a corporation has borrowed a certain amount of money from an institution or an individual and promises to repay it in the future under clearly defined terms.Corporate bond equivalent • See equivalent bond yield.Corporate bonds • Debt obligations issued by corporations. • Are obligations issued by corporations. They are frequently categorized as follows:
  9. 9. www.ftpall.com 9|Page  Intermediate Corporates,  Distressed Securities,  Junk Bonds,  Long Industrials,  Tennessee Valley Authority Bonds, • Utilities. There are other categories and subcategories, such as, financials -bank and nonbank, foreign, Canadian, Yankee and the list goes on. Find thousands of financial terms at www.ftpall.comCoupon bond • A debt obligation with coupons representing semiannual interest payments attached; the coupons are submitted to the trustee by the holder to receive the interest payments. No record of the purchaser is kept by the issuer, and the purchasers name is not printed on the certificate. See also: Bearer Bond.Cushion bonds • High-coupon bonds that sell at only at a moderate premium because they are callable at a price below that at which a comparable non-callable bond would sell. Cushion bonds offer considerable downside protection in a falling market. • High-coupon bonds that sell at only a moderate premium because they are callable at a price below that at which a comparable noncallable bond would sell. Cushion bonds offer considerable downside protection in a falling market.Debenture bond • An unsecured bond whose holder has the claim of a general creditor on all assets of the issuer not pledged specifically to secure other debt. Compare subordinated debenture bond, and collateral trust bonds.Deep discount bond • A bond issued with a very low coupon or no coupon and selling at a price far below
  10. 10. www.ftpall.com 10 | P a g e par value. When the bond has no coupon, its called a zero coupon bond. • A bond that has a Coupon Rate far below rates currently available on investments and whose value is at a significant discount from Par Value.Discount bond • Debt sold for less than its principal value. If a discount bond pays no interest, it is called a zero coupon bond. • A bond selling below par. Find thousands of financial terms at www.ftpall.com • A bond that is valued at less than its face amount.Dollar bonds • Municipal revenue bonds for which quotes are given in dollar prices. Not to be confused with "U.S. Dollar" bonds, a common term of reference in the Eurobond market. • Municipal revenue bonds for which quotes are given in dollar prices. Not to be confused with U.S. Dollar bonds, a common term of reference in the Eurobond market.Dollar price of a bond • Percentage of face value at which a bond is quoted.Equivalent bond yield • Annual yield on a short-term, non-interest bearing security calculated so as to be comparable to yields quoted on coupon securities. • Annual yield on a short-term, non-interest-bearing security calculated so as to be comparable to yields quoted on coupon securities.Eurobond • A bond that is (1) underwritten by an international syndicate, (2) offered at issuance simultaneously to investors in a number of countries, and (3) issued outside the
  11. 11. www.ftpall.com 11 | P a g e jurisdiction of any single country. • Bonds issued in Europe outside the confines of any national capital market. A Eurobond may or may not be denominated in the currency of the issuer. • A bond issued by an international borrower and sold to investors in countries with currencies other than the currency in which the bond is denominated. An international bond that is sold primarily in countries other than the country of the currency in which the issue is denominated.Eurodollar bonds Find thousands of financial terms at www.ftpall.com • Eurobonds denominated in U.S. dollars.Euroyen bonds • Eurobonds denominated in Japanese yen.Extendable bond • Bond whose maturity can be extended at the option of the lender or issuer.Extendible bonds notes • Bonds with short terms to maturity, typically 1 to 5 years, that can be renewed for a similar period at the option of the holders.Face value of a bond • The value that appears on the face of a bond that indicates the bond s value at its maturity date.Fidelity bond • A contract under which a bonding company agrees to reimburse a firm for up to a stated amount if a specified managers dishonest act results in a financial loss to the firm.Floating rate bonds
  12. 12. www.ftpall.com 12 | P a g e • bonds where the stated interest rate is adjusted periodically within stated limits in response to changes in specified money or capital market rates. See Table 6.4.Flower bond • Government bonds that are acceptable at par in payment of federal estate taxes when owned by the decedent at the time of death.Flower bonds • Government bonds that are acceptable at par in payment of federal estate taxes Find thousands of financial terms at www.ftpall.com when owned by the decedent at the time of death.Foreign bond • A bond issued by a nondomestic borrower in the domestic capital market. • A bond issued in a host countrys financial market, in the host countrys currency, by a foreign borrower. An international bond that is sold primarily in the country of the currency of the issue. • A bond issued on the domestic capital market of anther company.Foreign bond market • That portion of the domestic bond market that represents issues floated by foreign companies to governments.Full coupon bond • A bond with a coupon equal to the going market rate and consequently selling at or near par. • A bond with a coupon equal to the going market rate, thereby, the bond is selling at par.General obligation bond • Abbreviated GO. A municipal bond backed by the full faith, credit, and taxing power
  13. 13. www.ftpall.com 13 | P a g e of the issuing unit rather than the revenue from a given project. • Municipal securities secured by the issuers pledge of its full faith, credit, and taxing power. • Municipal securities secured by the issuers pledge of its full faith, credit, and taxing power. • Are securities issued by municipalities. The source of revenue to pay the interest and principal is taxes. These securities are also known as full faith and credit issues because they depend on the municipalitys capacity to tax. These issues are often Find thousands of financial terms at www.ftpall.com considered to be more stable than Revenue Bonds.Global bonds • Bonds that are designed so as to qualify for immediate trading in any domestic capital market and in the Euromarket.Government bond • See: Government securities.High coupon bond refunding • Refunding of a high-coupon bond with a new, lower coupon bond.High yield bond • See:junk bond.Hurricane bonds • Are also Catastrophe Bonds issued to pass on unacceptably high risks to speculators. In exchange, these speculators may receive potentially greater-than- market rates of return. These bonds have characteristics comparable to those for risky Collateralized Obligation tranches.Income bond • A bond on which the payment of interest is contingent on sufficient earnings. These
  14. 14. www.ftpall.com 14 | P a g e bonds are commonly used during the reorganization of a failed or failing business.Income bonds • Bonds that pay interest only when earnings are available. See Table 6.4. • Refer to securities which promise to repay the principal when due. However, these bonds differ from other bonds in that they promise to pay interest only when it is earned. This type of bond is verisimilar to many kinds of preferred stock. However, an advantage can be the tax deductibility of the interest charge when paid versus a preferred dividend payment. These bonds are sometimes known as Adjustment Find thousands of financial terms at www.ftpall.com Bonds. The quality of these bonds generally is not as good as investment grade issues because there is an additional contingency on the payment of interest.Indenture of a bond • A legal statement spelling out the obligations of the bond issuer and the rights of the bondholder.Indexed bond • Bond whose payments are linked to an index, e.g. the consumer price index.Industrial revenue bond • Abbreviated IRB. Bond issued by local government agencies on behalf of corporations.Inflation indexed treasury bond • A U.S. government security that increases the payments of interest and principal in proportion to the Consumer Price Index (CPI).Insured bond • A municipal bond backed both by the credit of the municipal issuer and by commercial insurance policies.Intermediate corporate bonds
  15. 15. www.ftpall.com 15 | P a g e • Are investment grade notes and bonds issued by corporations. The maturities range between 1 to 10 years. These securities encompass banks, other financial institutions, and industrial issuers.International bond • A bond that is initially sold outside the country of the borrower and often distributed in several countries.International bonds Find thousands of financial terms at www.ftpall.com • A collective term that refers to global bonds, Eurobonds, and foreign bonds.Investment grade bonds • A bond that is assigned a rating in the top four categories by commercial credit rating companies. For example, S&P classifies investment grade bonds as BBB or higher, and Moodys classifies investment grade bonds as Ba or higher. Related: High-yield bond.Jump bond • Are issues which are conditioned on an event or series of events. When the event - such as breaking a prepayment collar -occurs, it triggers a predetermined movement to another payment arrangement. This type of bond occurs in collateralized obligation structures.Junk bond • long-term secured debt securities that are rated double BB or less. Bonds that are not investment quality. Investment quality bonds are BBB or greater. • High-risk bonds that have low credit ratings or are in default. • A bond with a speculative credit rating of BB (S&P) or Ba (Moodys) or lower is a junk or high yield bond. Such bonds offer investors higher yields than bonds of financially sound companies. Two agencies, Standard & Poors and Moodys investor
  16. 16. www.ftpall.com 16 | P a g e Services, provide the rating systems for companies credit. • Bond purchased for speculative purposes. They are usually rated BB and lower, and they have a higher default risk.Junk bonds • Refer to non-investment grade debt securities. Sometimes, these issues are called high yield securities. These securities have credit ratings below Baa/BBB-.Level coupon bond Find thousands of financial terms at www.ftpall.com • Bond with a stream of coupon payments that are the same throughout the life of the bond.Limited tax general obligation bond • A general obligation bond that is limited as to revenue sources.Long bonds • Bonds with a long current maturity. • Bonds with a long current maturity. The long bond is the 30-year U.S. government bond.Low coupon bond refunding • Refunding of a low coupon bond with a new, higher coupon bond.Mismatch bond • Floating rate note whose interest rate is reset at more frequent intervals than the rollover period (e.g. a note whose payments are set quarterly on the basis of the one-year interest rate).Mortgage bond • Long-term debt financing secured by real estate, buildings, manufacturing facilities, or other fixed assets. See Table 6.4.
  17. 17. www.ftpall.com 17 | P a g e • A bond in which the issuer has granted the bondholders a lien against the pledged assets. Collateral trust bonds • Bond secured by a lien on property, equipment, or other real assets.Municipal bond • State or local governments offer muni bonds or municipals, as they are called, to pay for special projects such as highways or sewers. The interest that investors receive is exempt from some income taxes. Find thousands of financial terms at www.ftpall.com • Also known as Municipal Security. A debt security issued by a state, a municipality, or other subdivision -- such as a school, park, sanitary, or other local taxing district -- to finance its capital expenditures. Such expenditures might include the construction of highways, public works or school buildings.Municipal bond fund • A Mutual Fund that invests in Municipal Bonds and operates either as a unit investment trust or as an open-end fund. The funds objective is to maximize federally tax-exempt income.Par bond • Is the principal amount of the loan. While bonds were typically issued in $1,000 denominations, the prices were quoted in percents of that denominations. For example, a bond priced at 105 meant $1,050. • A bond selling at par.Payment in kind pik bond • A bond that gives the issuer an option (during an initial period) either to make coupon payments in cash or in the form of additional bonds.Performance bond • See SPAN® and Margin Requirement.
  18. 18. www.ftpall.com 18 | P a g ePositive covenant of a bond • A bond covenant that specifies certain actions the firm must take. Also called and affirmative covenant.Premium bond • A bond that is selling for more than its par value. • Bond selling above par. • A bond that is valued at more than its face amount. Find thousands of financial terms at www.ftpall.comPremium for bonds • Is the amount of price above par for Mortgage Backed Securities, Corporate Bonds, and Treasury Bonds. For convertibles, it is the amount that the convertible security is trading over the converted out value of the underlying instrument.Prerefunded bond • Refunded bond.Principal collateralization bonds • These bonds are issued in conjunction with defaulted Latin American Sovereign debt. The U.S. Government has issued Treasury bonds to collateralize (guarantee) the principal value of these bonds.Pure discount bond • A bond that will make only one payment of principal and interest. Also called a zero-coupon bond or a single-payment bond.Put bond • A bond that the holder may choose either to exchange for par value at some date or to extend for a given number of years.Real return bonds
  19. 19. www.ftpall.com 19 | P a g e • Abbreviated RRB. Bonds that adjust the semi-annual coupon payments and the par value for inflation.Refunded bond • Also called a prerefunded bond, one that originally may have been issued as a general obligation or revenue bond but that is now secured by an escrow fund consisting entirely of direct U.S. government obligations that are sufficient for paying the bondholders.Registered bond Find thousands of financial terms at www.ftpall.com • A bond whose owner is registered with the issuer. • A bond whose issuer records ownership and interest payments. Differs from a bearer bond which is traded without record of ownership and whose possession is the only evidence of ownership.Retractable bonds • Bonds that give the bondholder the option to sell the bond back to the issuing company at par ($1,000) either on a specific date, and every 1 to 5 years thereafter, or if the firm is acquired, acquires another company, or issues a large amount of additional debt. Usually carries a lower yield than non-retractable debt of the same quality.Revenue bond • A municipal bond secured by revenue from tolls, user charges, or rents derived from the facility financed. • A municipal bond supported by the revenue from a specific project, such as a toll road, bridge, or municipal coliseum. • Are debt securities which have a defined source of anticipated funds to pay both the principal and the interest. These funds come from an activity, project, or revenue source which is not related to a municipalitys capacity to enact taxes. These bonds
  20. 20. www.ftpall.com 20 | P a g e are sometimes viewed as more risky than General Obligation (GOs) Bonds. • A bond issued by a municipality to finance either a project or an enterprise where the issuer pledges to the bondholders the revenues generated by the operating projects financed, for instance, hospital revenue bonds and sewer revenue bonds.Samurai bond • A yen-denominated bond issued in Tokyo by a non-Japanese borrower. Related: bulldog bond and Yankee bond. Find thousands of financial terms at www.ftpall.comScheduled bonds • Are instruments which are engineered to receive principal payments using stipulated payment schedules. Generally, the term is used for bonds other than Planned Amortization Class (PAC) and Targeted Amortization Class (TAC) issues.Serial bonds • An issue of bonds of which a certain proportion matures each year. • A bond issue in which maturities are staggered over a number of years. • Is an issuance of bonds which have different maturity dates for the principal. Often these bonds are issued ona year-by-year basis but there can be maturity gaps as well. • Corporate bonds arranged so that specified principal amounts become due on specified dates. Related: term bonds.Series bond • Bond that may be issued in several series under the same indenture.Series ee bond • A nonmarketable, interest-bearing U.S. government savings bond issued at a discount from Par. Interest on Series EE bonds is exempt from state and local taxes. See also: Series HH Bond.
  21. 21. www.ftpall.com 21 | P a g eSeries hh bond • A nonmarketable, interest-bearing U.S. government savings bond issued at Par and purchased only by trading in Series EE bonds at maturity. Interest on Series HH bonds is exempt from state and local taxes. See also: Series EE Bond.Shogun bond • Dollar bond issued in Japan by a nonresident.Short bonds Find thousands of financial terms at www.ftpall.com • Bonds with a short current maturity. • Bonds with short current maturities.Short dated bonds • Long-term government bonds that are approaching maturity.Single payment bond • A bond that will make only one payment of principal and interest.Speculative grade bond • Bond rated Ba or lower by Moodys, or BB or lower by S&P, or an unrated bond.Step up bond • A bond that pays a lower coupon rate for an initial period which then increases to a higher coupon rate. Related:Deferred-interest bond, Payment-in-kind bondStocks and bonds hedge funds • Are combinations which are analogous to Balanced Mutual Funds but, depending on the underlying charter, can use higher degrees of leverage or derivatives.Straight bond • A bond that is nonconvertible, having no conversion feature.Straight bond value
  22. 22. www.ftpall.com 22 | P a g e • The price at which a convertible bond would sell in the market without the conversion feature.Stratified sampling bond indexing • A method of bond indexing that divides the index into cells, each cell representing a different characteristic, and that buys bonds to match those characteristics.Stripped bond • A financial security derived from an ordinary bond by an investment dealer who, for Find thousands of financial terms at www.ftpall.com a profit sells claims against the coupon interest or face value of the underlying bond to investors in the marketplace. The financial claim is against a single cash flow that is promised by the original bond issuer many years into the future. Like a zero coupon bond, stripped bonds trade at substantial discounts from the face value (terminal value) of the security. • Bond that can be subdivided into a series of zero-coupon bonds.Subordinated debenture bond • An unsecured bond issued only by creditworthy firms. The lenders claims are the same as those of any general creditor, hence are subordinated to other debenture holders and any bond issues that may be outstanding. • An unsecured bond that ranks after secured debt, after debenture bonds, and often after some general creditors in its claim on assets and earnings. Related: Debenture bond, mortgage bond, collateral trust bonds.Support bonds • Are a class of securities that absorb many of the risks of the Planned Amortization Class structure.Sushi bond • An eurobond issued by a Japanese corporation.
  23. 23. www.ftpall.com 23 | P a g eT bond • See Treasury Bond.Term bond • A bond issue in which all bonds mature at the same time. • Often referred to as bullet-maturity bonds or simply bullet bonds, bonds whose principal is payable at maturity. Related: serial bonds • Is a newly issued municipal bond with one stated maturity. This compares to Serial Find thousands of financial terms at www.ftpall.com Bonds.Treasury bond • All securities issued with initial maturities greater than ten years are called Treasury Bonds (T-bonds). Like Treasury Notes, they pay interest semi-annually. • Long-term coupon-bearing U.S. Treasury securities issued as direct obligations of the U.S. Government and having initial maturities of more than 10 years. • Are government obligations with more than 1 year to maturity. Notes have maturities between one and 10 years while the bonds have maturities between 10 years and 30 years. These pay interest semi-annually. • Also known as T Bond. A marketable, fixed-interest U.S. government debt security with a maturity of more than ten years. • Debt obligations of the U.S. Treasury that have maturities of 10 years or more.U.s. savings bonds • Registered, nontransferable securities issued by the U.S. government in amounts up to $10,000.U.s. treasury bond • U.S. government debt with a maturity of more than 10 years.
  24. 24. www.ftpall.com 24 | P a g eVariable rated demand bond vrdb • Floating rate bond that can be sold back periodically to the issuer.Yankee bond • A foreign bond issued in the U.S. market, payable in dollars, and registered with the SEC. • Foreign bonds denominated in US$ issued in the United States by foreign banks and corporations. These bonds are usually registered with the SEC. For example, Find thousands of financial terms at www.ftpall.com bonds issued by originators with roots in Japan are called Samurai bonds.Z bond • Also known as an accrual bond or accretion bond; a bond on which interest accretes interest but is not paid currently to the i nvestor but rather is accrued, with accrual added to the principal balance of the Z and becoming payable upon satisfaction of all prior bond classes.Z or accrual bond • Is a security which has accretion characteristics. Its balance grows much in the sense of a zero coupon bond, however it is subject to prepayments or other events.Zero coupon bond • A corporate or municipal debt security traded at a deep discount from face value. The bond pays no interest; rather, it may be redeemed at maturity for its full face value. It may be issued at a discount, or it may be stripped of its coupons and repackaged. • A bond in which no periodic coupon is paid over the life of the contract. Instead, both the principal and the interest are paid at the maturity date. • Such a debt security pays an investor no interest. It is sold at a discount to its face price and matures in one year or longer.
  25. 25. www.ftpall.com 25 | P a g e • Is a security which the interest and/or principal has been discounted to be offered at less than the stipulated principal or coupon amount due at maturity or early option payment. These securities effectively behave like treasury bills or other paper offered at an original discount. Zero coupon bonds can have conversion factors and other features implicitly embedded or explicitly stated.Zero or low coupon bonds • Bonds issued with no (zero) or very low coupon rates and sold at a large discount from par. Canada Customs and Revenue Agency (CCRA) deems the apparent Find thousands of financial terms at www.ftpall.com capital gains on such bonds as interest income.

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