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
Notes are a type of debt instrument that typically have a shorter term than bonds. Unlike bonds, which are issued in increments of $1,000, notes are usually issued in increments of $5,000. Notes also typically have a higher interest rate than bonds. When an investor purchases a note, they are essentially lending money to the … Read more
What is a creditor, and what happens if creditors aren’t repaid? Is a creditor a customer? A creditor is an entity that lends money to another entity and is typically repaid with interest. For example, a bank may lend money to a business in the form of a loan, and the business would then be … Read more
What Is Default? What Happens When You Default? Examples of Default. Which statement below best describes a technical default? A technical default occurs when a borrower fails to meet the terms of their loan agreement, which can include making timely interest or principal payments. This can trigger a default clause in the loan agreement, which … Read more
Convexity definition is the measurement of the curvature of a bond’s yield curve. Convexity is used in the pricing of bonds and other interest rate securities. It is a measure of the sensitivity of the price of a bond to changes in interest rates. What does convexity mean in bonds? Convexity is a measure of … Read more
A Maintenance Bond is a type of fixed income security that is issued by a company in order to raise funds for maintaining its facilities and equipment. The bond is typically issued for a term of five to ten years, and pays interest semi-annually. At the end of the term, the bondholder will receive the … Read more
