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Vocabulary

bearer bond

debt security issued by a business entity such as a corporation, or a government

bond fund

fund that specifically invests in bonds and other forms of debt

bond market

marketplace where participants trade new debt or buy and sell debt securities

bond rating

credit rating of a bond based on the likelihood of default and other instrument-specific risks

bond rating agency

independent organization that analyzes bonds and the underlying assets in order to offer an investment rating

callable bond

debt security in which the issuer has included the option to repurchase the bond before its maturity date

convertible bond

debt security that can be changed into a number of shares of the bond issuer's stock

corporate bond

debt security issued by a company in order to raise capital through debt

coupon payment

periodic payment from a bond that is outside of the payment at maturity

debt to equity ratio

ratio used to measure how a company has financed its business through debt, shareholders’ equity, or a combination of both

discount bond

debt security that sells under the face value

Eurobond

debt security denominated in a currency that is not the home currency of the issuer

face value

principal amount that is returned to the lender at the end of maturity

financial assets

tangible liquid assets such as cash, stocks, and bonds

government bond

debt security issued by a government, whether local, state, or federal

high-yield bond

bond with a low credit rating for which investors can expect a high return on investment

mortgage bond

debt security that uses a mortgage as the underlying asset

premium bond

debt security that sells over its face value

yield to maturity (YTM)

return on a bond from the date of purchase through the date of maturity, expressed as an annual percentage

zero-coupon bond

debt security that is issued at a deep discount to its face value; does not pay interest payments, but at maturity pays the full face value