Liberty Bonds: The Basics And How They Function

What are Liberty Bonds? Liberty Bonds are a type of fixed income investment that were first introduced during World War I to finance the war efforts. They were issued by the government to raise funds from the public, allowing individuals to lend money to the government in exchange for regular …

Kiwi Bond: A Guide to Investing in New Zealand’s Government Bonds

Why Invest in Kiwi Bonds? Investing in Kiwi Bonds offers numerous benefits that make them an attractive option for investors. Here are some reasons why you should consider investing in Kiwi Bonds: Stable and Secure Investment Furthermore, Kiwi Bonds are backed by the full faith and credit of the New …

Kicker: Its Functionality And Different Varieties

Functionality of Kicker The functionality of a kicker is to enhance the overall return on investment for the investor. It acts as an incentive or bonus for the investor to participate in the investment opportunity. The kicker is usually structured as an additional component of the investment, separate from the …

Kangaroo Bond – An Introduction to Australia’s Unique Bond Market

Overview of Kangaroo Bonds Kangaroo Bonds are a unique type of bond that is issued in the Australian market by foreign entities. These bonds are denominated in Australian dollars, making them attractive to investors who want exposure to the Australian market without the need to convert their currency. One of …

Joint Bond: Definition, Mechanics, and Real-Life Examples

Joint Bond: Definition, Mechanics, and Real-Life Examples A joint bond is a type of financial instrument that is issued by multiple entities or borrowers together. It is a collaborative effort where two or more parties come together to raise capital by issuing a single bond. Joint bonds are commonly used …

Japanese Government Bond JGB Overview Examples in Bonds

Overview of Japanese Government Bond JGB Japanese Government Bond (JGB) is a fixed-income security issued by the government of Japan. It is considered one of the safest investments in the world due to the financial stability of the Japanese government. JGBs are issued in various maturities, ranging from short-term to …

Investment Grade Credit Rating: Understanding the Details

What is Investment Grade Credit Rating? An investment grade credit rating is a measure of the creditworthiness of a company or government entity. It is an assessment made by credit rating agencies, such as Standard & Poor’s, Moody’s, and Fitch Ratings, that evaluates the likelihood that the entity will default …

International Bond Investing: A Comprehensive Guide to Definition, Examples, and Risks

International Bond Investing: A Comprehensive Guide International bond investing is a strategy that involves investing in bonds issued by foreign governments, corporations, or other entities. It offers investors the opportunity to diversify their portfolios and potentially earn higher returns compared to domestic bond investments. However, it also comes with its …

Interest Rate Risk Definition and Impact on Bond Prices

What is Interest Rate Risk? Interest rate risk refers to the potential for changes in interest rates to affect the value of fixed income investments, such as bonds. When interest rates rise, the value of existing bonds typically decreases, while when interest rates fall, the value of existing bonds typically …

How Debt Financing Works: Examples, Costs, Pros & Cons

How Debt Financing Works: Examples, Costs, Pros & Cons Debt financing is a method of raising capital by borrowing money from lenders. It is a common practice for businesses and individuals to use debt financing to fund various projects, investments, or expenses. This article will provide an overview of how …

High-Yield Bond Investing: A Comprehensive Guide to Definition and Types

Types of High-Yield Bonds 1. Corporate Bonds: Corporate bonds are issued by corporations to raise capital. These bonds offer higher yields compared to investment-grade bonds because they carry a higher risk of default. Investors who are comfortable with taking on more risk may find corporate bonds attractive. 3. Distressed Bonds: …

Hard Call Protection Explained: And Implementing It

Explaining the Concept of Hard Call Protection Hard call protection is a term used in the fixed income market to describe a provision that protects bondholders from having their bonds called or redeemed by the issuer before the maturity date. This protection is put in place to provide investors with …

Green Bond: Types, How to Buy, and FAQs

Green Bond: Types, How to Buy, and FAQs A green bond is a type of bond that is issued to finance projects that have a positive environmental impact. These projects can include renewable energy, energy efficiency, sustainable agriculture, and other initiatives that promote sustainability and reduce carbon emissions. There are …

Global Bonds: A Comprehensive Overview of How They Work

Global Bonds: A Comprehensive Overview Global bonds are a type of fixed income investment that allows investors to diversify their portfolios by investing in debt securities issued by governments, corporations, and other entities around the world. These bonds are denominated in different currencies and can offer attractive returns and risk …

Gilts: Types and How to Invest

Gilts: Types and How to Invest Types of Gilts There are several types of gilts available for investors: Type Description Conventional Gilts These are the most common type of gilts. They pay a fixed rate of interest twice a year and return the face value of the bond at maturity. …

Floating-Rate Note: Essential Information You Should Know

Floating-Rate Note: Essential Information You Should Know A floating-rate note (FRN) is a type of bond that has a variable interest rate. Unlike traditional fixed-rate bonds, the interest rate on an FRN is not fixed for the entire term of the bond. Instead, it is tied to a benchmark interest …

Fixed-Income Security: Definition, Types, and Examples

Fixed-Income Security: Definition, Types, and Examples A fixed-income security is a type of investment that provides a fixed return to the investor over a specified period of time. These securities are typically issued by governments, municipalities, corporations, and other entities to raise capital. There are several types of fixed-income securities, …

Fidelity Bond Definition Types and Uses

Fidelity Bond Definition How Fidelity Bonds Work When a business purchases a fidelity bond, they are essentially transferring the risk of employee dishonesty to the insurance company. In the event that an employee engages in fraudulent activities, the business can file a claim with the insurance company to recover the …

Face Value Vs Market Value: The Difference In Finance

Exploring the Concept of Face Value Face value is important because it determines the amount that will be repaid to the investor at maturity. For example, if a bond has a face value of $1,000, the issuer of the bond is obligated to repay the investor $1,000 when the bond …

Eurobond: Definition, Issuers, Pros and Cons

Eurobond: Definition, Issuers, Pros and Cons An Eurobond is a type of bond that is issued in a currency different from the currency of the country where it is issued. It is a popular form of international debt financing, allowing companies and governments to raise funds in foreign currencies. Eurobonds …

Discount Margin DM Definition When It Applies and Calculation

What is Discount Margin (DM)? Discount Margin (DM) is a financial term used in the fixed income market to measure the additional yield that an investor can earn by purchasing a bond at a price below its face value. It represents the compensation for the risk associated with the bond’s …

Discount Bond Definition Using Yield to Maturity and Risks

Overview of Discount Bond Unlike traditional bonds that pay periodic interest, discount bonds are purchased at a discount and the investor earns a return by receiving the full face value of the bond at maturity. This means that the investor does not receive any interest payments throughout the life of …

Dim Sum Bond: Understanding the Basics and Exploring Panda Bonds

What are Dim Sum Bonds? Dim Sum Bonds are offshore bonds denominated in Chinese yuan (CNY) and issued outside of mainland China. They are named after the popular Chinese cuisine, dim sum, which refers to a variety of bite-sized dishes served in bamboo steamers. These bonds provide international investors with …

Default Meaning And Consequences: The Impact And Examples

Default Meaning and Consequences Default refers to the failure of a borrower to meet their financial obligations, such as repaying a loan or making interest payments on bonds. When a borrower defaults, it has significant consequences for both the borrower and the lender. For the borrower, defaulting on a loan …

Debt Fund Definition Risk How to Invest Examples

What is a Debt Fund? A debt fund is a type of mutual fund that invests primarily in fixed-income securities such as bonds, treasury bills, and other debt instruments. These funds are managed by professional fund managers who aim to generate income for investors through interest payments and capital appreciation. …

Day-Count Convention Definition Common Types

What is Day-Count Convention? A day-count convention is a method used in finance to calculate the number of days between two dates in order to determine interest payments or the price of financial instruments. It is an important aspect of fixed income securities, such as bonds and loans. The day-count …

Current Yield: Definition, Formula, and Calculation

Current Yield: Definition, Formula, and Calculation Current yield is a financial metric used to measure the annual return on an investment, specifically in fixed income securities such as bonds. It is expressed as a percentage and represents the interest income generated by the investment relative to its current market price. …