Bond (finance)

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In finance, a bond is an instrument of indebtedness of the bond issuer to the holders.wikipedia
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Municipal bond

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The most common types of bonds include municipal bonds and corporate bonds.
A municipal bond, commonly known as a Muni Bond, is a bond issued by a local government or territory, or one of their agencies.

Interest

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The bond is a debt security, under which the issuer owes the holders a debt and (depending on the terms of the bond) is obliged to pay them interest (the coupon) or to repay the principal at a later date, termed the maturity date.
Interest, in finance and economics, is payment from a borrower or deposit-taking financial institution to a lender or depositor of an amount above repayment of the principal sum (that is, the amount borrowed), at a particular rate.

Security (finance)

securitiessecuritydebt securities
The bond is a debt security, under which the issuer owes the holders a debt and (depending on the terms of the bond) is obliged to pay them interest (the coupon) or to repay the principal at a later date, termed the maturity date. Bonds and stocks are both securities, but the major difference between the two is that (capital) stockholders have an equity stake in a company (that is, they are owners), whereas bondholders have a creditor stake in the company (that is, they are lenders).
They include shares of corporate stock or mutual funds, bonds issued by corporations or governmental agencies, stock options or other options, limited partnership units, and various other formal investment instruments that are negotiable and fungible.

Coupon (bond)

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The bond is a debt security, under which the issuer owes the holders a debt and (depending on the terms of the bond) is obliged to pay them interest (the coupon) or to repay the principal at a later date, termed the maturity date.
A coupon payment on a bond is the annual interest payment that the bondholder receives from the bond's issue date until it matures.

Finance

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In finance, a bond is an instrument of indebtedness of the bond issuer to the holders.
The second, "sources of capital" relates to how these investments are to be funded: investment capital can be provided through different sources, such as by shareholders, in the form of equity (privately or via an initial public offering), creditors, often in the form of bonds, and the firm's operations (cash flow).

Stock

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Bonds and stocks are both securities, but the major difference between the two is that (capital) stockholders have an equity stake in a company (that is, they are owners), whereas bondholders have a creditor stake in the company (that is, they are lenders).
In the United Kingdom, Republic of Ireland, South Africa, and Australia, stock can also refer to completely different financial instruments such as government bonds or, less commonly, to all kinds of marketable securities.

Yield to maturity

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The overall rate of return on the bond depends on both the terms of the bond and the price paid.
The yield to maturity (YTM), book yield or redemption yield of a bond or other fixed-interest security, such as gilts, is the (theoretical) internal rate of return (IRR, overall interest rate) earned by an investor who buys the bond today at the market price, assuming that the bond is held until maturity, and that all coupon and principal payments are made on schedule.

High-yield debt

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High-yield bonds are bonds that are rated below investment grade by the credit rating agencies.
A high-yield bond (non-investment-grade bond, speculative-grade bond, or junk bond) is a term in finance for a bond that is rated below investment grade.

Loan

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Thus a bond is a form of loan or IOU: the holder of the bond is the lender (creditor), the issuer of the bond is the borrower (debtor), and the coupon is the interest.
For other institutions, issuing of debt contracts such as bonds is a typical source of funding.

Primary market

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Bonds are issued by public authorities, credit institutions, companies and supranational institutions in the primary markets.
In a primary market, companies, governments or public sector institutions can raise funds through bond issues and corporations can raise capital through the sale of new stock through an initial public offering (IPO).

Bond market

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Bonds sold directly to buyers may not be tradeable in the bond market.
This is usually in the form of bonds, but it may include notes, bills, and so on.

Dirty price

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The price can be quoted as clean or dirty.
The price of a bond is the present value of its future cash-flows.

Embedded option

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If the bond includes embedded options, the valuation is more difficult and combines option pricing with discounting.
An embedded option is a component of a financial bond or other security, and usually provides the bondholder or the issuer the right to take some action against the other party.

Callable bond

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A callable bond (also called redeemable bond) is a type of bond (debt security) that allows the issuer of the bond to retain the privilege of redeeming the bond at some point before the bond reaches its date of maturity.

Commercial paper

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Certificates of deposit (CDs) or short-term commercial paper are considered to be money market instruments and not bonds: the main difference is the length of the term of the instrument.
Commercial paper is usually sold at a discount from face value and generally carries lower interest repayment rates than bonds due to the shorter maturities of commercial paper.

Floating rate note

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Floating rate notes (FRNs) are bonds that have a variable coupon, equal to a money market reference rate, like LIBOR or federal funds rate, plus a quoted spread (also known as quoted margin).

Current yield

The interest payment ("coupon payment") divided by the current price of the bond is called the current yield (this is the nominal yield multiplied by the par value and divided by the price).
The current yield, interest yield, income yield, flat yield, market yield, mark to market yield or running yield is a financial term used in reference to bonds and other fixed-interest securities such as gilts.

Option (finance)

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Many choices, or embedded options, have traditionally been included in bond contracts.

Zero-coupon bond

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A zero-coupon bond (also discount bond or deep discount bond) is a bond where the face value is repaid at the time of maturity.

Money market

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Certificates of deposit (CDs) or short-term commercial paper are considered to be money market instruments and not bonds: the main difference is the length of the term of the instrument.
This contrasts with the capital market for longer-term funding, which is supplied by bonds and equity.

Convertible bond

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In finance, a convertible bond or convertible note or convertible debt (or a convertible debenture if it has a maturity of greater than 10 years) is a type of bond that the holder can convert into a specified number of shares of common stock in the issuing company or cash of equal value.

Puttable bond

putable bond
Puttable bond (put bond, putable or retractable bond) is a bond with an embedded put option.

Inflation-indexed bond

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Daily inflation-indexed bonds (also known as inflation-linked bonds or colloquially as linkers) are bonds where the principal is indexed to inflation or deflation on a daily basis.

Indenture

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In the case of bonds, the indenture shows the pledge, promises, representations and covenants of the issuing party.

Debt

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Commercial debt is generally subject to contractual terms regarding the amount and timing of repayments of principal and interest.