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In finance, a bond is a type of security under which the issuer owes the holder a debt, and is obliged – depending on the terms – to provide cash flow to the creditor (e.g. repay the principal (i.e. amount borrowed) of the bond at the maturity date as well as interest (called the coupon) over a specified amount of time. [1])
Buying bonds through mutual funds and ETFs: An easier option can be to invest in bond mutual funds or exchange-traded funds (ETFs). Rather than choosing individual bonds, you choose a fund that ...
Floating-rate bonds: Not all bonds are fixed-income bonds. Some bonds’ interest payments change according to other short-term benchmark rates or even the price of a commodity.
A bond is a form of debt where the bond issuer borrows money in return for paying interest and returning the bond’s principal to the buyer when the bond matures. Bonds are commonly issued by ...
Daily inflation-indexed bonds pay a periodic coupon that is equal to the product of the principal and the nominal coupon rate. For some bonds, such as in the case of TIPS, the underlying principal of the bond changes, which results in a higher interest payment when multiplied by the same rate. For example, if the annual coupon of the bond were ...
In finance, a high-yield bond (non-investment-grade bond, speculative-grade bond, or junk bond) is a bond that is rated below investment grade by credit rating agencies. These bonds have a higher risk of default or other adverse credit events but offer higher yields than investment-grade bonds in order to compensate for the increased risk.
The T-bond’s yield represents the return stemming from the bond, and is the interest rate the U.S. government pays to investors to borrow their money for a period of time.
Yield to put (YTP): same as yield to call, but when the bond holder has the option to sell the bond back to the issuer at a fixed price on specified date. Yield to worst (YTW): when a bond is callable, puttable, exchangeable, or has other features, the yield to worst is the lowest yield of yield to maturity, yield to call, yield to put, and others.