Bond funds are mutual funds that invest in bonds and other debt instruments. Bond funds typically offer a higher degree of safety than equity funds, but they also usually have lower returns. Bond funds can be further classified according to the type of bonds they invest in, such as government bonds, corporate bonds, or high-yield … Read more
A bond call protection is a type of bond provision that protects investors from the risk of a bond issuer calling a bond before its maturity date. This type of protection is typically found in bonds that have a call provision, which gives the issuer the right to call the bond before its maturity date. … Read more
An embedded option is a type of derivative that is included in a bond contract. The option gives the holder the right, but not the obligation, to buy or sell the underlying security at a specified price on or before a certain date. Embedded options are found in a variety of bonds, including corporate bonds, … Read more
A credit market is a market in which debt securities are traded. Debt securities are securities that represent a loan that must be repaid by the borrower with interest. The credit market includes both the bond market and the lending market. The bond market is the market for debt securities that are issued by governments … Read more
A debt/equity swap is a type of financial transaction in which a company swaps its debt for equity in another company. This can be done to reduce the amount of debt the company has on its balance sheet, or to raise capital for the company. There are a few different types of debt/equity swaps that … Read more
A traunch is a term used in private equity and venture capital to describe a portion or tranche of a larger investment. A traunch typically refers to a slice of a larger investment that is made over time, with each tranche having its own terms and conditions. For example, a venture capital firm may invest … Read more
An angel investor is an individual who provides capital for a business start-up, usually in exchange for convertible debt or ownership equity. A small percentage of angel investors are also venture capitalists. Angel investors typically invest their own personal funds, as opposed to funds from an institution. They may also invest through a group or … Read more
If you are looking at a distribution waterfall for a private equity or venture capital fund, there are a few key things to understand. First, the waterfall typically starts with a return of capital to the limited partners (LPs) or investors. This is the money that they originally invested, plus any accumulated profits. Once the … Read more
Pre-money valuation refers to the value of a company before an investment is made. This is the value of the company that an investor uses to determine how much equity to purchase in the company. The pre-money valuation is calculated by subtracting the amount of the investment from the post-money valuation. Does pre-money valuation include … Read more
A convertible note is a debt instrument that can be converted into equity at the discretion of the holder. The conversion price is typically set at a discount to the current market price of the underlying equity, providing the holder with an incentive to convert. The conversion value definition refers to the price at which … Read more
