Z-Bond Definition.

A Z-Bond is a type of bond that has a coupon rate that is reset periodically based on changes in a reference rate, typically an interest rate index. The reference rate is applied to a notional amount to determine the coupon payments. Z-Bonds are also known as floating rate bonds or variable rate bonds. What … Read more

What Is the Trust Indenture Act of 1939?

The Trust Indenture Act of 1939 is a federal law that governs the issuance of certain types of bonds, including corporate bonds. The act requires that bonds be issued in accordance with a trust indenture, which is a contract between the issuer and the trustee. The trustee is responsible for safeguarding the interests of the … Read more

Above Par.

The term “above par” is used to describe a bond that is trading at a price above its face value. For example, if a bond has a face value of $1,000 and is trading at a price of $1,100, it is said to be trading “above par.” This means that the bond is trading at … Read more

What Is a BOBL Futures Contract?

A BOBL Futures Contract is a financial contract between two parties, in which one party agrees to buy a certain amount of a specific bond from the other party at a predetermined price, on a specified date in the future. The bonds that are traded under this contract are typically German Government Bonds (Bunds). Are … Read more

What Is a Covered Bond?

A covered bond is a type of debt security that is backed by a pool of assets, typically mortgages. Covered bonds are issued by financial institutions in order to raise capital, and they are typically used to finance long-term projects such as infrastructure development. Because they are backed by a pool of assets, covered bonds … Read more

General Obligation (GO) Bond Defintiion.

A general obligation (GO) bond is a type of municipal bond that is backed by the full faith and credit of the issuer, typically a state or local government. This means that the issuer is legally obligated to repay the bondholders from any and all sources of revenue, including property taxes and other taxes. GO … Read more

Acquisition Debt.

Acquisition debt is defined as bonds, notes, or other debt instruments that are issued by a company in connection with the acquisition of another company. The proceeds from the sale of these instruments are typically used to finance the purchase price of the target company. Acquisition debt is typically classified as long-term debt on a … Read more

What Is Gross Yield?

Gross yield is the interest rate earned on a bond before deducting taxes and other expenses. The gross yield is equal to the coupon rate divided by the bond’s price. For example, if a bond has a coupon rate of 10% and a price of $1,000, the gross yield is 10%. Is bond yield the … Read more

Bid Bond.

A bid bond is a type of surety bond that is often required in the bidding process for government contracts. The bid bond protects the government entity from financial loss if the winning bidder fails to meet the terms of the contract. The bid bond is typically a small percentage of the total value of … Read more

What Is a Fixed-Income Style Box?

A fixed-income style box is a tool used by investors to help categorize and compare different types of fixed-income securities. The style box is split into four quadrants, each representing a different risk/return profile. The four quadrants are: 1. Treasury securities: These are the safest investments, with the lowest yields. 2. Government-sponsored securities: These are … Read more