The term “maturity” refers to the length of time until a debt instrument reaches its final payoff date. For example, a bond with a maturity of 10 years means that the bond will be paid off in full in 10 years. The term can also be used more generally to refer to the date on … Read more
A debt fund is a type of investment fund that invests in debt securities, such as bonds, notes, and bills. Debt funds can be either actively managed or passively managed. Passively managed debt funds seek to track the performance of a specific debt index, such as the Barclays Capital U.S. Aggregate Bond Index. Actively managed … Read more
A Principal-Protected Note (PPN) is a type of fixed income investment that guarantees the initial investment, plus any accumulated interest, will be returned to the investor at maturity. The underlying investment is typically a portfolio of stocks or other securities, which may be actively managed or passive. The return on the investment is typically linked … Read more
A “kicker” is a feature of a financial security that provides the holder with an additional benefit. For example, a bond with a built-in “kicker” may offer a higher interest rate than a similar bond without the feature. In another example, a mutual fund with a “kicker” may offer a higher level of return if … Read more
A flat bond definition is a type of fixed income security in which the coupon payments are equal over the life of the bond. In other words, the coupon payments do not increase or decrease over time. The term “flat” in this context refers to the fact that the payments are always the same. What … Read more
What is the Original Issue Discount (OID)? The Original Issue Discount (OID) is the difference between the market value of a bond and the price at which it is issued. This discount is typically given to bonds that are sold below their face value, and is used to calculate the bond’s interest payments. What is … Read more
A straight bond is a bond that pays periodic interest payments and repays the face value of the bond at maturity. Straight bonds are the simplest type of bond and are the most common type of bond issued by corporations. What are the 5 types of bonds? 1. Treasury bonds: These are bonds issued by … Read more
Modified duration is a measure of a bond’s price sensitivity to changes in interest rates. It is calculated as the percentage change in the price of a bond for a given change in interest rates. For example, if a bond has a modified duration of 5, then a 1% increase in interest rates will lead … Read more
A fidelity bond is a type of financial insurance that protects a business from losses caused by the dishonest or fraudulent activities of its employees. Fidelity bonds are also known as surety bonds or dishonesty bonds. What does DD mean for bonds? In the context of bonds, DD typically refers to the “dividend date,” which … Read more
A T-Bond is a long-term government debt security with a maturity of more than 10 years. T-Bonds are issued by the U.S. Treasury and are backed by the full faith and credit of the U.S. government. T-Bonds are the least risky of all government debt securities and offer the lowest interest rates. What are short-term … Read more
