Buy bonds to secure a steady income stream or to spread your investment risk.
Computed Interest Interest accrued from the issue date or the last coupon date until the security settlement date Bonds accrue interest from the date of their most recent interest payment until the date of their next interest payment. On the next payment date, the buyer of the security pays the
Interest accrued from the issue date or the last coupon date until the security settlement date Bonds accrue interest from the date of their most recent interest payment until the date of their next interest payment. On the next payment date, the buyer of the security pays the seller the principal plus any accrued interest.
The inevitable rise to the maturity or face value of a fixed-income investment over time.
The amount of a bond issue's principal that will be due at maturity
Funds rate at the bank
Discount rate in Canadian dollars The Bank of Canada's overnight lending rate to financial institutions is at least this much. The target for the overnight rate, along with the Bank Rate, has been set on eight regular dates per year since December 2000.
one hundredth of a percentage Typically, it is used to justify shifts in bond yields. A yield increase of 12 basis points is equivalent to no change in yield at all. Twelve percent (e g 6 24 % versus 6 % Adding 12 percentage points brings the total to 36%.
Bonds that are used as a benchmark to measure something else Canadian government bonds are issued by the Bank of Canada at predetermined intervals of time. The presence of the Bank of Canada issues simplifies bond pricing for issuers because reliable market yields can be used as references or benchmarks.
Cost of Bid
A buyer's or a seller's highest acceptable offer price
The number of securities (at par value) that the highest bidder is willing to buy.
The yield at which a security is purchased by the highest bidder
A document evidencing the existence of a debt owed by a borrower to an investor at a specified interest rate and for a specified period of time. The debt is settled after that time frame has passed. There must be collateral for a loan in order for a bond to be valid under the law. In common usage, the term refers to any form of unsecured or collateralized debt for a set period of time.
Demand for purchase
A request to buy a security
An issue of bonds that can be redeemed by the issuer before they mature. There must be a certain set of circumstances
The Cost: Please Inquire
Cost to the issuer of repurchasing a bond that has a call provision.
Securities issued by a chartered bank that pay a fixed interest rate Terms range from one to seven years with a minimum purchase price of $1,000.
Non-financial corporations' short-term debt instruments They can only be held for a maximum of a year.
Debenture with a Conversion Option
A bond that can be exchanged for shares of the issuer's common stock at a predetermined price
The percentage of the bond's face value (in dollars) that the issuer promises to pay in interest each year. Part of a bond that guarantees the buyer periodic interest payments at a set rate Annual rate is quoted but payments are made twice a year.
A certificate that can be found with a bond that proves interest is owed on a certain date.
The CUSIP number
To standardize the identification of municipal, government, and corporate securities, the American Bankers Association sponsored the creation of the Committee on Uniform Security Identification Procedures.
In contrast to a broker, a dealer always acts as the principal, making purchases and sales on his own behalf.
A loan that doesn't have any collateral or a lien on any specific assets but is instead backed by the issuer's general creditworthiness
Formal abbreviation for identifying a specific problem. Typically, Issuer_Coupon_Maturity (i.e., the protocol e CAN 8 75 12/05)
Set of data containing information Information such as the CUSIP, Description, Bid Price, Ask Price, Yield, Size, Maturity, Coupon, and Credit Ratings (CBRS, Moody's, and S&P) are included.
Indicative of how much a bond is selling for less than its face (or maturity) value.
Monetary instruments traded on financial markets that do not accrue interest and are sold at a discount and bought back at par value by the issuer when they mature; e. g Federal Reserve Notes
Slope of yields falling
To clarify, this is a yield curve anomaly in which the yield increases as the maturity date gets closer to the present. Instances of this kind usually arise when the central bank is actively trying to end an inflationary trend.
How long your typical fixed-income investment is expected to last Despite the name, ten-year bonds are not truly ten-year bonds. The cumulative effect of interest payments reduces expected duration. Interest payments have a shorter time horizon than principal payments. Considering there are no cash flows to consider, the maturity and duration of a zero coupon bond are the same. This is a risk measurement term.
Issuances with a specified maturity date that, under certain circumstances, grant their holders the right to request an additional maturity extension from the issuer
Value of a security's underlying principal Bond face value, or the stated value on the bond certificate. This is typically the bond's face value when it matures. It doesn't reflect the value in today's market.
Yield curve is flat
That's shorthand for a yield curve in which interest rates are constant across the board. If a bond's settlement date is the same as its coupon payment date, or if the issuer is unable to make interest payments, then the bond is said to be "flat," meaning that it is trading with no accrued interest.
Yield curve with a hump
The yields on one or more maturities are significantly higher or lower than the yields on the other maturities due to an anomaly in the yield curve.
The borrower (government or company) whose debt to bondholders must be repaid.
Government bond with interest payments
Interest-only bonds only pay interest when the issuer earns it.
Investment dealers keep a stock of "shelf products" financed by their own capital and offered at competitive prices to serve their retail and institutional clients.
Dealers in the money market who are authorized to participate in the weekly Treasury bill auction
Put a cap on it
A price-capped order
Joint venture for the foreseeable
One with a maturity date further out than ten years
Create a marketplace
When a dealer quotes bid and offered prices at which he is willing to buy and sell, he is said to be making a market.
Establishment of a Market Order
A buy or sell order that is based on the current market price It's critical that it be carried out as soon as possible and for as little money as possible.
Date of expiration
The security's maturity date is the date on which the issuer must repay the holder the principal borrowed and any accrued interest.
Financial commitment for the intermediate term
One with a maturation period of three to ten years
Market for Exchange of Currency
The wholesale financial market for short-term debt instruments with short maturities (such as bills, commercial paper, bankers' acceptances, and corporate paper).
Grade from Moody's
Credit Analysis Technique A benchmark for evaluating bond values
Municipal bonds are issued by municipalities and their agencies.
Municipal short-term notes are issued by governments in exchange for future revenue streams such as tax collections, bond sales, and other sources.
This is the price at which a dealer is willing to sell the securities.
The number of a security's shares being sold at par value
Profit from an Offer
A security's yield is the rate at which it is being sold.
In the process of taking off
A bond issue that is not considered a "benchmark issue" It may be unattractive to trade because of a high or low coupon, a small issue size, a high concentration of ownership, or some other factor. For such an issue, the bid-ask spread will widen because brokers are less likely to stock it or cannot move it quickly once they do.
An order is a request to purchase or sell a financial instrument.
What this translates to in essence is "decentralized." The bond market is not centered around a single location like the stock exchange; instead, transactions take place verbally or electronically between markets.
Value at 100%
When a debt security matures, it can be redeemed from its issuer at its face value, which is the principal amount of the security.
Value in terms of the Par Value
A bond's stated face value. It has nothing to do with the similar expression used in the context of stock markets. "Face Value," "Par," or "FV"
The yield curve is rising
This is the standard yield curve, in which the yield increases with increasing time until maturity.
The sum of money that one or more people are prepared to spend or receive in exchange for a security. Typically, costs are denoted per one hundred dollars of Par Value.
To what extent you lend On the bond's due date, you'll receive this amount back.
Provincial government and agency debt securities
An expression of desire to acquire or dispose of
There is a major distinction between this and callable bonds, though. A redeemable bond, typically issued by corporations, can be "called" by the issuer, but not for the issuer's financial benefit. Rather, the bond issue may be retired early in the event of surplus cash or a corporate development.
Chance of reinvestment
You can divide the potential dangers into two categories: The first is that bondholders are not guaranteed to receive the yield to maturity stated on the bond, as not all interest is reinvested at the same rate. Secondly, if you have a large portion of your portfolio due to mature at once in an environment where interest rates have dropped significantly, you run the risk of experiencing this phenomenon.
The sum of principal that remains after interest has been deducted
A security that allows the holder to return their holdings for face value before the final maturity date, under certain conditions
Indication of a desire to sell
A request to dispose of a particular security.
Paid-in-full Date of Settlement
Information about the month, day, and year that the deal will close Settlement for Equities is customarily three business days (or "T 3") after the trade date.
Securities with a Fixed Income Settlement:
Commercial Paper and US and Canadian Treasury Bills: T 1
Government of Canada Bonds with less than three years remaining until maturity (T 2)
All Other Strip Bonds and Fixed Income Instruments: T 3
Short selling is the practice of selling a security that one does not own with the hope that its price will decline or as part of an arbitrage opportunity. In order for a short sale to be legal, the sold securities must be bought back at some point.
Indentures governing corporate issues typically call for the issuer to contribute annually to a sinking fund, from which the proceeds are used to retire bonds from the issue at random.
Variation between a security's bid and offer price
Yield spread is the price or yield difference between two securities with different types or maturities.
The spread in underwriting is the difference between the issuer's realized price and the investor's paid price.
Variation in two rates or prices In the language of commodity traders, this is what "basis" means.
A bond from which the coupons have been removed, resulting in a series of zero coupon issues with the same face value and original maturity date as well as the interest payment dates of the coupons as their maturity dates. Usually offered at a reduced price
Please see Section 2 for further details. 11 in the Terms and Relationship Disclosure Document
A collection of data for analysis Information such as the CUSIP, Description, Bid Price, Offer Price, Yield, Bid Size, and Offer Size are all included.
A deal is a type of exchange. There are two parties involved in a trade, along with a price and an amount.
Commercial Exchange Date
The date on which a deal first begins to be worked. Settlement dates can be different from trade dates.
Note from the Treasury
Government discount instruments are sold at auction once a week. The typical initial maturities of T-bills are 13 weeks (three months), 26 weeks (six months), and 52 weeks (one year).
Competitively Opposite Market
A market where the asking price and the asking price for the most common trading unit are displayed simultaneously
A market where buyers and sellers both post their prices
How much a bond's price shifts in response to a change in yield
An annual percentage rate that indicates how much interest the investor will make or lose on their investment over the security's entire term.
Inflation-adjusted yield curve
Differences in credit quality across time and how they relate to the different maturities Canada's bond yield curve serves as the industry standard there. See Negative Yield Curve, Flat Yield Curve, Humped Yield Curve, and Positive Yield Curve for explanations of the different types of yield curves.
Progress toward full maturity
Rate of return earned by an investor on a debt security over the full holding period, including interest payments and any capital gains or losses. Return on investment (ROI) is the amount of money an investor makes if they hold a security until maturity and reinvest all coupons as they are received.
An obligation with no coupon payments
An interest-free bond is one that never yields any money. Zero-Interest Bonds (Zeros) trade at a discount to their face value. Return on investment, assuming the bond is held until its maturity date, is represented by the discount. Bonds are typically issued with interest payment dates based on those of a regularly issued bond.
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