Callable Bond
A bond which is redeemable by the issuer prior to the maturity date at a specified price.
Convertible / Exchangeable Bonds
Bonds that can be converted or exchanged into shares of a company at such time and such price as specified in the terms and conditions of the bonds.
Discount Bond
A bond that is sold below the par value.
Floating-rate Bond
A bond for which the interest rate is adjusted periodically, linking to the level of a market reference yield.
Mortgage Bond
A kind of bond that pledges either real property (using a mortgage) or personal property as security.
Zero-coupon Bond
A bond that bears no interest return but it is sold at a discount from the par value.
Par Value
The value of a bond, as stated on the coupon. Interest is calculated on par value.
Coupon Rate
The annual rate of interest, calculated on the bond's par value, which the issuer promises to pay to bondholders.
Coupon Frequency
The number of interest payment that the bond issuer promises to pay to bondholders. Coupon payments are usually made each six months or each year.
Accrued Interest
Interest due from issue date or from the last coupon payment date to the settlement date.
Basis Point
One 1/100 of 1 per cent i.e. 0.01%. Yield differences among fixed-income securities are stated in basis points.
Maturity Date
The date when the principal amount of the bond is payable.
Premium
The amount by which the price of a bond exceeds its par value.
Yield to Maturity
It represents the total of coupon payments until maturity, plus interest on interest, and whatever gain or loss is realized from the security at maturity.
Credit Ratings
An indicative rating set by rating agencies to assess the overall ability of the issuer to fully repay the debt obligation. Minimum investment grade is generally set at Baa or BBB or above.
Default
Failure on the part of the issuer to pay interest and/or principal when due.