A refunded bond is a bond that has been repaid by the issuer prior to its maturity date. The issuer may choose to refund the bond for a number of reasons, such as to take advantage of lower interest rates or to raise additional capital. When a bond is refunded, the issuer pays back the … Read more
Bond washing is the illegal practice of selling bonds to investors and then quickly repurchasing them at a lower price, pocketing the difference. This activity is often done by unscrupulous brokers who prey on inexperienced investors. Bond washing can be difficult to detect, as it typically takes place over a short period of time and … Read more
A bond quote is the price at which a bond is trading in the market. The quote includes the bond’s interest rate, par value, and current yield. Why do companies issue bonds? Bonds are a type of debt instrument that companies use to raise capital. By issuing bonds, companies are able to borrow money from … Read more
A bond covenant is a contract between a bond issuer and a bondholder that establishes certain rights and obligations of each party. The covenant is typically written into the bond indenture, which is the legal document that governs the relationship between the issuer and the holder. The covenant typically gives the holder the right to … Read more
Accrued interest is the interest that has accumulated on a bond since the last interest payment was made. For example, if a bond pays interest semi-annually and the last interest payment was made six months ago, the accrued interest would be the interest that has accumulated on the bond over the past six months. The … Read more
A Brady bond is a debt instrument created by the Brady Plan in 1988 to restructure the debt of developing countries. The bonds were named after then U.S. Treasury Secretary Nicholas Brady. The Brady Plan was an effort to address the Latin American debt crisis of the 1980s. Brady bonds are issued by a debtor … Read more
The average price is the price of a security or group of securities over a specified period of time. The average price is calculated by taking the sum of the prices of the securities in the group and dividing by the number of securities in the group. What is LCL in stock? In the context … Read more
When looking at the meaning of principal in finance, it is important to first understand what fixed income securities are. Fixed income securities are debt instruments that provide a stream of payments that are fixed in amount and schedule. Common examples of fixed income securities include bonds, debentures, and mortgages. The principal of a fixed … Read more
What You Need to Know About Floating-Rate Notes Why would you buy a floating rate bond? Floating rate bonds offer investors protection against rising interest rates. When rates go up, the coupon on a floating rate bond adjusts upward, while the coupon on a fixed rate bond does not. This means that the holder of … Read more
A guaranteed bond is a type of bond that pays periodic interest payments and is backed by a third party guarantee. This means that if the issuer of the bond defaults on their interest payments, the third party will step in and make the payments on behalf of the issuer. The third party guarantee makes … Read more
