Hedge
An investment which has the purpose of minimizing the impact of adverse movements in interest rates or prices
Interest
Paid compensation for the use of money expressed as an annual percentage rate
Issue date
The date on which a security is issued
Issuer
A state, agency, authority or corporation that sells bonds in order to borrow money
Junk bond
A bond with a rating of Ba or BB or lower and which has a high yield
Leverage
Borrowed money to augment investing power
LIBOR (London Interbank Offered Rate)
The rate that banks charge each other for short-term Eurodollar loans
Liquidation value
In the case an issuer liquidates this is the amount a bond holder may receive
Liquidity
The ability to trade bonds without causing any big adjustments in their prices.
Long-term debt
Debt with a maturity date further than one year
Maturity date
The date when the principal amount of a security becomes payable
Medium-term note
A debt security issued under a program that allows an issuer to offer notes continuously to investors through an agent
Municipal bond
A bond issued by local governmental
Par
Price equal to the face amount of a security
Par amount
The principal amount of a bond or note due at maturity
Payment date
The date that the principal and interest are made to the owner of a bond
Premium
The sum by which the price of a bond is more than its principal amount
Present value
The current value of a future payment stream
Primary market
Market where new issues of bonds sold
Principal
The face amount of a bond
Redemption
The buying back of a bond by the issuer
Reinvestment risk
The risk that interest income or the principle amount will have to be reinvested at lower rates in a declining market
Risk
A measure of the degree of uncertainty and/or of financial loss inherent in an investment or decision
Secondary market
Ongoing market for bonds
Short-term debt
Generally, debt which matures in one year or less
Spread
The difference between the market price and cost of purchase
Underwrite
The purchase of a bond from an issuer to resell it to investors
Underwriter
The securities dealer who purchases a bond issue from an issuer and resells it to forex trading investors
Yield curve
The graphical relationship between yield and maturity among bonds of different maturities and the same credit quality.
Yield to maturity
A yield on a security calculated by assuming that interest payments will be made until the final maturity date
Zero-coupon bond
A bond for which no periodic interest payments are made
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