Zero Coupon Bonds: Bonds not contracted to make periodic coupon payments. Interest is realized by the bond holder by buying the bond at substantially below its par value.
Interest of Zero coupon bond: The difference between the par value, realized at maturity and the purchase price.
Step-up Notes: Securities with coupon rate that increases over time.
Deferred coupon bonds: Bonds with coupon payment deferred for a period of time. Payments made after deferred period are higher than interest payments to compensate for lack of interest payment during deferred period.
Floating-rate securities (floater): Also called variable rate securities, do not have fixed coupon rate. Coupon payments reset periodically according to some reference rate.
Cap: The maximum coupon rate for a floater.
Floor: The minimum coupon rate for a floater.
Inverse Floater: Floating securities whose coupon rate moves in opposite direction to the reference rate. Increase in reference rates case decrease in coupon for floaters and vice versa.
Interest of Zero coupon bond: The difference between the par value, realized at maturity and the purchase price.
Step-up Notes: Securities with coupon rate that increases over time.
Deferred coupon bonds: Bonds with coupon payment deferred for a period of time. Payments made after deferred period are higher than interest payments to compensate for lack of interest payment during deferred period.
Floating-rate securities (floater): Also called variable rate securities, do not have fixed coupon rate. Coupon payments reset periodically according to some reference rate.
Cap: The maximum coupon rate for a floater.
Floor: The minimum coupon rate for a floater.
Inverse Floater: Floating securities whose coupon rate moves in opposite direction to the reference rate. Increase in reference rates case decrease in coupon for floaters and vice versa.
No comments:
Post a Comment