Tag: bond

Credit Spread Option definition explanation

What is Credit Spread Option?
A financial derivative contract that transfers credit risk from one party to another. An initial premium is paid by the buyer in exchange for potential cash flows if a given credit spread changes from its current level.

The buyer of a credit spread option will receive cash flows if the credit spread between two specific benchmarks widens or narrows. Credit spread options come in the form of both calls and puts, allowing both long and short credit positions. Read more for examples and further explanation including related video clips and also comments
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Collateralized Bond Obligation – CBO definition explanation

What is Collateralized Bond Obligation – CBO?
An investment-grade bond backed by a pool of junk bonds. Junk bonds are typically not investment grade, but because they pool several types of credit quality bonds together, they offer enough diversification to be “”investment grade.”” Read more for examples and further explanation including related video clips and also comments
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Callable Security definition explanation

What is Callable Security?
A security with an embedded call provision that allows the issuer to repurchase or redeem the security by a specified date. Since the holder of a callable security is exposed to the risk of the security being repurchased, the callable security is generally less expensive than comparable securities that do not have a call provision. Read more for examples and further explanation including related video clips and also comments
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Bond definition explanation

What is Bond?
A debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. Bonds are used by companies, municipalities, states and U.S. and foreign governments to finance a variety of projects and activities.

Bonds are commonly referred to as fixed-income securities and are one of the three main asset classes, along with stocks and cash equivalents.. Read more for examples and further explanation including related video clips and also comments
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Balloon Maturity definition explanation

What is Balloon Maturity?
1. A repayment schedule for a bond issue where a large number of the bonds come due at a one time (normally at the final maturity date).

2. A final loan payment that is considerably higher than prior payments. This is also known as a “”balloon payment.”” Read more for examples and further explanation including related video clips and also comments
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Angel Bond definition explanation

What is Angel Bond?
A slang term for investment-grade bonds which pay a lower interest rate, due to the higher credit rating of the issuing company. Angel bonds are the opposite of fallen angels, which are bonds that have a ‘junk’ rating, and are much more risky. Read more for examples and further explanation including related video clips and also comments
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Monetary Base definition explanation

What is Monetary Base?
The total amount of a currency that is either circulated in the hands of the public or in the commercial bank deposits held in the central bank’s reserves. This measure of the money supply typically only includes the most liquid currencies.

Also known as the “”money base””. Read more for examples and further explanation including related video clips and also comments
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