Sunday 8 January 2012

Glossary - Fixed Income

Coupon Rate: The interest rate promised in a contract; this is the rate used to calculate the periodic interest payments.Also known as the nominal rate.

Coupon: The annual amount of interest payment made to the bondholder during the term of the bond.

Maturity: Number of years remaining prior to final principle payment. Years when the debt is outstanding.

Short term bonds: Maturity 1 to 5 years.

Intermediate-term bonds: Maturity 5 to 12 years

Long term bonds: Maturity over 12 years

Par value: Amount of bond that the issuer promises to repay to the bond holder at or by maturity date. Also termed as face value, maturity value, principle value and redemption value.

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