Notes are a type of debt instrument that typically have a shorter term than bonds. Unlike bonds, which are issued in increments of $1,000, notes are usually issued in increments of $5,000. Notes also typically have a higher interest rate than bonds. When an investor purchases a note, they are essentially lending money to the … Read more
What is a creditor, and what happens if creditors aren’t repaid? Is a creditor a customer? A creditor is an entity that lends money to another entity and is typically repaid with interest. For example, a bank may lend money to a business in the form of a loan, and the business would then be … Read more
What Is Default? What Happens When You Default? Examples of Default. Which statement below best describes a technical default? A technical default occurs when a borrower fails to meet the terms of their loan agreement, which can include making timely interest or principal payments. This can trigger a default clause in the loan agreement, which … Read more
Convexity definition is the measurement of the curvature of a bond’s yield curve. Convexity is used in the pricing of bonds and other interest rate securities. It is a measure of the sensitivity of the price of a bond to changes in interest rates. What does convexity mean in bonds? Convexity is a measure of … Read more
A Maintenance Bond is a type of fixed income security that is issued by a company in order to raise funds for maintaining its facilities and equipment. The bond is typically issued for a term of five to ten years, and pays interest semi-annually. At the end of the term, the bondholder will receive the … Read more
A lottery bond is a debt security that is issued by a government or quasi-government entity and is backed by the proceeds from the sale of lottery tickets. The lottery bond is typically issued with a term of 10 to 20 years and pays periodic interest payments, with the principal being repaid at maturity. Lottery … Read more
Callable bonds are bonds that can be redeemed by the issuer prior to their maturity date. This means that the issuer can call the bond back from the investor and repay the principal plus any accrued interest. Callable bonds typically have higher interest rates than non-callable bonds because investors require a higher yield to compensate … Read more
Debt financing is the process of raising capital by selling debt instruments to investors. The most common type of debt instrument is a bond, which is a loan that must be repaid with interest over a specified period of time. Other types of debt instruments include promissory notes, bills of exchange, and commercial paper. Debt … Read more
Bond insurance is insurance that protects bondholders from the risk of a bond issuer defaulting on its debt obligations. The insurance is provided by a third-party insurer, and it typically covers the full value of the bond. Bond insurance can make bonds more attractive to investors, since it reduces the risk of investing in them. … Read more
A serial bond is a type of debt instrument that is issued in a series of installments, or tranches, over a period of time. Each tranche has its own maturity date and interest rate. The first tranche is typically issued at par, while subsequent tranches are usually issued at a discount to par. Serial bonds … Read more
