Current yield is a ratio that measures the annual interest income of a security in relation to its current market price. To calculate current yield, divide the annual interest payment by the market price of the security. For example, if a security has a market price of $100 and pays interest of $5 per year, … Read more
A bond broker is an individual or firm that buys and sells bonds on behalf of its clients. Bond brokers typically work with both institutional and individual investors, and their main goal is to provide their clients with the best possible prices for the bonds they are interested in buying or selling. In order to … Read more
A bulldog bond is a type of debt security that is issued in the United Kingdom by a non-U.K. company. The name “bulldog bond” is derived from the fact that these bonds were first issued by the London-based banking firm of Baring Brothers in the early 1900s. Bulldog bonds are also sometimes referred to as … Read more
The average effective maturity is the weighted average of the maturities of all the bonds in a portfolio. The weighting is based on the size of each bond’s market value. The average effective maturity is used to measure the sensitivity of a bond portfolio’s value to changes in interest rates. What is the difference between … Read more
A dragon bond is a type of fixed income security that pays periodic interest payments and then repays the principal in a lump sum at maturity. Dragon bonds are issued by companies in China and denominated in Chinese yuan. They are also sometimes referred to as panda bonds. What are the 3 types of bonds … Read more
Gilts are bonds issued by the British government. The term “gilt” refers to the gilt-edged paper that these bonds are printed on. Gilts are considered to be very safe investments, since they are backed by the full faith and credit of the British government. However, they also tend to offer relatively low returns, since the … Read more
A foreign bond is a debt security that is denominated in a currency other than the investor’s domestic currency. For example, if an investor in the United States purchases a bond that is denominated in Japanese Yen, the bond is considered a foreign bond. Foreign bonds offer investors a way to diversify their portfolio and … Read more
Convertible Bond: What It Is, Example, and Benefits. What are examples of convertible securities? Convertible securities are securities that can be converted into another security. For example, a convertible bond can be converted into shares of the issuing company. Convertible securities usually have a higher yield than non-convertible securities because they offer the potential for … Read more
A put bond is a type of bond that allows the holder to sell the bond back to the issuer at a predetermined price. The put option is typically exercisable at certain intervals, such as every six months. Put bonds are typically issued by corporations in order to raise capital. The main benefit of a … Read more
Macaulay Duration: Definition, Formula, and Example How is Macaulay duration Modified duration calculated? Macaulay duration is the weighted average of the cash flows from a bond, where the weights are determined by the present value of each cash flow. Modified duration is a measure of a bond’s price sensitivity to changes in interest rates. It … Read more
