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									                   Financial Terms related to Bond

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Accrual 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|Page

  • Is a security which does not have the owner's 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.


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  • 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|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.

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   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

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|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

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   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|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 day's bond
   market. Quotes for corporate and government bonds are percentages of the bond's
   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

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   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 issuer's financial condition and profit potential. Bond rating services are provided
   by, among others, Standard & Poor's 500, Moody's 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|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 manager's 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.

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   Named after a Treasury secretary, Nicholas Brady. Brady bonds are debt-for-debt

   • 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|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

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   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 issuer's 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|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

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   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|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.

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Coupon 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
   purchaser's 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 | P a g e

   par value. When the bond has no coupon, it's 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.

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   • 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

   • 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

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.


   • 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 | 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

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   • 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 manager's dishonest act results in a financial loss to the

Floating rate bonds                     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

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   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 country's financial market, in the host country's 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

General obligation bond

   • Abbreviated GO. A municipal bond backed by the full faith, credit, and taxing power                      13 | P a g e

   of the issuing unit rather than the revenue from a given project.

   • Municipal securities secured by the issuer's pledge of its full faith, credit, and taxing

   • Municipal securities secured by the issuer's pledge of its full faith, credit, and taxing

   • 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 municipality's capacity to tax. These issues are often

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   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 | 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

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   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

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 | 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

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   • 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 (Moody's) 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 Moody's investor                     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

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   • 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

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 | 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.

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   • 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 fund's 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 | P a g e

Positive 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.

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Premium 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 | 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

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   • 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

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 municipality's capacity to enact taxes. These bonds                     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.

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Scheduled 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

   • 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 | P a g e

Series 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

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   • 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 Moody's, 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 bond

Stocks 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 | 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

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   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 | P a g e

T 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

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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 | P a g e

Variable 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,

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   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

   • 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 | 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

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   capital gains on such bonds as interest income.

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