Accrued Interest
The portion of the next coupon payment that has accumulated since the last coupon date, paid by the buyer to the seller at settlement.
Basis Point
One one-hundredth of a percentage point (0.01%), used as the standard unit of measure for interest rates, bond yields, and spreads.
Bond Covenant
Contractual conditions in a bond indenture that restrict issuer behavior to protect bondholders from increased risk after issuance.
Bond Price
The present value of a bond's future coupon payments and par repayment, discounted at the required yield.
Bond Rating
A letter-grade assessment of a bond issuer's creditworthiness.
Convertible Bond
A bond that can be converted into a set number of the issuer's shares.
Convexity
The second-order measure of a bond's price sensitivity to yield changes, capturing the curvature that modified duration misses.
Corporate Bond
A debt security issued by a corporation to raise capital from investors.
Coupon Payment
The periodic interest payment a bondholder receives, equal to the face value multiplied by the coupon rate divided by the payment frequency.
Credit Spread
The additional yield a corporate bond pays over a comparable-maturity Treasury bond, compensating investors for credit risk.
Effective Duration
A numerical duration measure that uses actual price changes from parallel yield shifts, suitable for bonds with embedded options.
Green Bond
A fixed-income security issued to raise capital specifically for projects with environmental or climate benefits.
Investment Grade
A bond rating of BBB−/Baa3 or above, indicating low default risk.
Junk Bond
A high-yield bond rated below investment grade, carrying higher default risk.
Macaulay Duration
The weighted-average time (in years) to receive all of a bond's cash flows, used as a measure of interest rate sensitivity.
Modified Duration
Estimates the percentage price change of a bond for a 1% change in yield.
Duration Price Approximation
Approximates the dollar price change of a bond from a given yield shift using modified duration.
Subordinated Debt
Debt that ranks below senior creditors in bankruptcy proceedings, compensating investors with higher yields for the greater loss risk.
Yield to Call
The annualised return an investor earns if a callable bond is called by the issuer on the first call date.
Yield to Maturity
The total annualised return an investor earns by holding a bond to maturity, accounting for price, coupons, and par repayment.