A roll-down return is the periodic return on a bond that is rolled over at a higher price. The higher price results in a higher yield to maturity, which is the return that is typically used to compare different bonds. What is a carry trade in fixed income? A carry trade in fixed income is … Read more
When a bond is said to be “pulling to par,” it means that the bond’s price is rising in relation to its face value. In other words, the bond is becoming more valuable as it approaches maturity. This is typically seen as a good sign for investors, as it means that the bond is likely … Read more
A high-yield bond spread is the difference in yield between a high-yield bond and a comparable treasury bond. The high-yield bond spread is used to measure the risk of investing in high-yield bonds. A higher spread indicates a higher risk. How are high yield bonds priced? High yield bonds are typically priced using a spread … Read more
A bond indenture is a legal contract between a bond issuer and a bondholder that lays out the terms and conditions of the bond issue. The indenture sets forth the rights and obligations of the issuer and the bondholders, and contains covenants that protect the interests of the bondholders. The indenture is signed by the … Read more
Pre-refunding bonds are bonds issued by a municipality in order to refund outstanding debt that is about to come due. The proceeds from the sale of the pre-refunding bonds are used to pay off the outstanding debt, with the municipality then being responsible for repaying the pre-refunding bonds over time. Pre-refunding bonds are often issued … Read more
What is a Fixed Income Security? A fixed income security is a type of investment that provides a steady stream of income. The most common examples of fixed income securities are bonds, which are issued by corporations and governments. Fixed income securities are generally less risky than stocks, but they also provide lower returns. For … Read more
The term “Ba3/BB-” is a credit rating that indicates that a company or entity is a “speculative” or “junk” grade issuer, and is considered to be a higher risk investment. This credit rating is given by Moody’s Investor Service and Standard & Poor’s (S&P), two of the major credit rating agencies. Are BB rated bonds … Read more
A registered bond is a type of debt security that is registered with the issuing company. The issuing company keeps track of the owners of the bonds and makes periodic interest payments to them. The bonds are usually issued in denominations of $1,000 or more and have maturities of 10 years or more. The interest … Read more
Commercial paper is a type of unsecured debt issued by businesses to raise capital. What is the duration of commercial paper? Commercial paper is a short-term debt security issued by corporations and banks. The typical maturity of commercial paper is between 2 and 270 days. What is commercial paper PDF? Commercial paper (CP) is a … Read more
Yield Spread: Definition, How It Works, and Types of Spreads What is yield spread in real estate? In real estate, the yield spread is the difference in yield between two investment properties. The yield is a measure of the return on investment, and is typically expressed as a percentage. The yield spread is used to … Read more
