A bond purchase agreement (BPA) is a contract between a buyer and a seller in which the buyer agrees to purchase a specified amount of bonds from the seller at a specified price. The BPA will specify the type and quantity of bonds to be purchased, the price at which the bonds will be purchased, … Read more
Hard call protection is a type of call protection that limits the issuer’s ability to call the bond before its maturity date. Hard call protection typically applies to bonds that are issued with a put option, which gives the holder the right to sell the bond back to the issuer at a predetermined price. If … Read more
The call price is the price at which the issuer of a bond may redeem the bond before its maturity date. The issuer typically calls the bond when interest rates have fallen, allowing it to refinance the bond at a lower interest rate. For the investor, a callable bond typically pays a higher coupon rate … Read more
The current maturity definition is the date on which the final payment of principal and interest is due. This date is typically set at the time the security is issued, and is known as the maturity date. The current maturity definition may also include a call provision, which gives the issuer the right to call … Read more
An income bond is a type of debt instrument that pays periodic interest payments to the bondholder, but does not guarantee the return of principal. Income bonds are often issued by utility companies and other organizations that have a steady stream of income from operations. Income bonds are generally less risky than other types of … Read more
A time deposit, also known as a term deposit, is a type of bank deposit that has a specific maturity date. The money deposited cannot be withdrawn for the term of the deposit, typically ranging from one month to five years. Time deposits typically offer higher interest rates than regular savings accounts, but they are … Read more
Net interest income is the difference between the interest income earned on a company’s assets and the interest expense incurred on its liabilities. In order to calculate net interest income, a company must first calculate its gross interest income. This is the total interest income earned on all of the company’s assets. Next, the company … Read more
Duration is a term used in fixed income investing to describe the sensitivity of a security’s price to changes in interest rates. It is typically expressed as a number of years. The higher the duration, the greater the price sensitivity. Duration can be used to measure the risk of a portfolio, as well as to … Read more
Market Value in Finance. Face value is the original value of a financial asset, as opposed to its market value. What is face value with example? The face value of a bond or other fixed-income security is the value that appears on the security’s certificate or face. For example, a U.S. Treasury bill with a … Read more
Aa2 is a term used by Moody’s Investor Service to describe a medium-grade credit risk. Aa2 is the third-highest rating given by Moody’s and is one notch below Aa1. Aa2 is still considered to be a very good credit risk, and is only given to companies or governments that have a strong ability to repay … Read more
