A bond with interest and principle payments insured by a third party. Insured bonds are usually found as a feature of municipal bonds; they are purchased…

1. The charge for the privilege of borrowing money, typically expressed as an annual percentage rate. 2. The amount of ownership a stockholder has in…

The interest portion of mortgage, Treasury or bond payments, which is separated and sold individually from the principal portion of those same payments…

The amount charged, expressed as a percentage of principal, by a lender to a borrower for the use of assets. Interest rates are typically noted on an…

An interest rate derivative in which the holder has the right to receive an interest payment based on a variable interest rate, and then subsequently…

An investment strategy that uses derivatives to hedge an investor's exposure to interest rate fluctuations. The investor purchases an interest rate ceiling…

The interest that is earned upon the re-investment of interest payments. Interest-on-interest is primarily used in the context of coupon paying bonds…

The yield spread between two fixed-income securities in different sectors with the same maturity. In the bond market, an intermarket-sector spread could…

A swap transaction meant to capitalize on a yield discrepancy between bond market sectors. Opportunities for intermarket spread swaps exist when there…

A type of fixed income security with a maturity, or date of principle repayment, that is set to occur in the next 3-10 years. Bonds and other fixed income…

Bonds that are issued in a country by a non-domestic entity. International bonds include Eurobonds, foreign bonds and global bonds.

Corporate debt securities that are designed to allow ease of purchase by individual investors. Internotes reflect the issued debt of the underlying entity…

A yield curve derived by using on-the-run treasuries. Because on-the-run treasuries are limited to specific maturities, the yield of maturities that lies…

A method of estimating an unknown price or yield of a security. This is achieved by using other related known values that are located in sequence with…

The yield spread between two fixed-income securities with the same maturity within the same sector. For example, a yield discrepancy between transportation…

A bond or other type of debt whose coupon rate has an inverse relationship to short-term interest rates. With an inverse floater, as interest rates rise…

A situation in which the yield difference between a longer term financial instrument and a shorter term instrument is negative. This is calculated by…

An interest rate environment in which long-term debt instruments have a lower yield than short-term debt instruments of the same credit quality. This…

A rating that indicates that a municipal or corporate bond has a relatively low risk of default. Bond rating firms, such as Standard & Poor's, use different…

A a type of security that can be used to purchase underlying common shares. It is similar to a warrant except that it is subject to the conversion ratio…

1. The process of offering securities as an attempt to raise funds. Companies may issue bonds or shares to investors as a method of financing the business…

A legal entity that develops, registers and sells securities for the purpose of financing its operations. Issuers may be domestic or foreign governments…

A bond issued by the government of Japan. The government pays interest on the bond until the maturity date. At the maturity date, the full price of the…

A type of annuity that makes payments for the lifetime of two or more beneficiaries. Also referred to as a "joint life annuity", these are often purchased…

A bond that is guaranteed by a party other than the issuer. Also called a "joint-and-several bond."These are commonly used when a parent company is required…

A certificate of deposit (CD) with a minimum denomination of $100,000. Jumbo CDs are typically bought and sold by large institutional investors, such…

Generally speaking, any issue that ranks lower in claim to another issue in terms of dividends, interest, principal, etc. A junior issue is the opposite of a senior issue.

A bond rated 'BB' or lower because of its high default risk. Also known as a "high-yield bond" or "speculative bond". These are usually purchased for…

A type of foreign bond that is issued in the Australian market by non-Australian firms and is denominated in Australian currency. The bond is subject…

A contract between a parent company and its subsidiary to maintain solvency and financial backing throughout the term set in the agreement. This is a…

Holding all other maturities constant, this measures the sensitivity of a security or the value of a portfolio to a 1% change in yield for a given maturity.The…

1. A right, exercisable warrant, or other feature that is added to a debt instrument to make it more desirable to potential investors by giving the debt…

An index used by bond funds as a benchmark to measure their relative performance. The index includes government securities, mortgage-backed securities…

A fixed-income index that focuses on asset-backed securities. The Lehman Brothers Asset-Backed Securities Index serves as the performance benchmark for…

An unmanaged market-weighted index, comprised of government and investment grade corporate debt instruments with maturities of one year or greater. The…

An index made up of mortgage-backed securities that is used for benchmarking purposes. The Lehman Brothers MBS Index consists of fixed-rate securities…

A type of zero-coupon Treasury bond issued by the U.S. government through Lehman Brothers. Lehman Investment Opportunity Notes (LIONs), were created as…

A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. In the event that the buyer…

Former bond trader and former vice chairman of Salomon Brothers who is credited with introducing securitization to the financial world. Initially, mortgage-backed…

A graphical representation of various maturities of the London Interbank Offered Rate (LIBOR), which is the short-term floating rate at which large banks…

A debt in which the creditor has limited claims on the loan in the event of default. Limited recourse debt sits in between secured bonds and unsecured…

A zero coupon bond that is callable (by issuer), putable (by investor), and convertible. LYONs are synthetic products that are financially engineered…

1. When a business or firm is terminated or bankrupt, its assets are sold and the proceeds pay creditors. Any leftovers are distributed to shareholders…

A premium that investors will demand when any given security can not be easily converted into cash, and converted at the fair market value. When the liquidity…

A fixed-income security that permits investors to buy portions of an outstanding loan or package of loans. LPN holders participate, on a pro rata basis…

The administration aspect of a loan from the time the proceeds are dispersed until the loan is paid off. This includes sending monthly payment statements…

The process of involving several different lenders in providing various portions of a loan. Mainly used in extremely large loan situations, syndication…

A bond that matures in more than 10 years. When people refer to "the long bond," this typically is the 30-year U.S. treasury. Because they tie up money…

The amount of funds that is lost by a bank or other financial institution when a borrower defaults on a loan. Academics suggest that there are several…

A bond issued in the U.S. and U.K. with a rate of return dependent upon a lottery style payout. The lottery payout structure involves a method of random…