Bond Basics
A bond is this type of financial instrument.
What is a debt security?
This is the interest income bondholders receive.
What is the coupon?
A bond with no periodic interest, sold at a discount
What is a strip (zero-coupon) bond?
The Government of Canada issues these short-term obligations.
What are treasury bills (T-bills)?
In a bond quote, this is the price at which the dealer sells the bond to investors.
What is the ask price?
This is the amount repaid at maturity.
What is the principal (or face value)?
Bonds can be short-term, medium-term, or long-term depending on this.
What is term to maturity?
Bonds that issuers can redeem before maturity.
What are callable bonds?
A bond secured by company real property or assets.
What is a mortgage bond?
This price represents what buyers are willing to pay for a bond.
What is the bid price?
The contract that outlines bond details is called this
Trust deed or Bond Indenture
A bond that trades quickly without losing value is called this.
What is liquid?
A bond that lets the holder exchange it for common shares.
What is a convertible bond?
These bonds are considered second in quality only to Government of Canada bonds, since provinces have strong taxation powers.
What are provincial government bonds?
A bond trading exactly at 100 is said to be at this.
What is par
A bond trading below 100 is said to be trading at this
What is a discount?
A bond trading above 100 is said to be trading at this.
What is a premium?
A bond that allows the holder to sell it back to the issuer before maturity.
What is a retractable bond?
Provincial governments often guarantee these types of debt
What are guaranteed bonds?
A bond rated below investment grade is commonly called this.
What is a junk bond (or high-yield bond)?
A bondholder earns this return if they hold the bond until maturity.
What is yield to maturity?
Bonds are often issued in these denominations.
What are $1000 units
A bond issued in the issuer's country and currency, while foreign bonds are issued outside the issuer's country.
What us a domestic bond
When the government buys bonds in the open market, it increases the money supply as part of this type of policy.
What is expansionary monetary policy (or open market operations)?
According to Moody’s, this bond rating indicates the highest credit quality and the lowest level of credit risk.
What is Aaa?