Baby bonds are low-denomination bonds that make it easier for small investors to participate in the bond market. They are generally worth $5,000 or less and were originally coined to make investing more accessible.
Bellwether is a security or indicator used to predict the direction of a market or sector. Notable examples include IBM in stocks and the 30-year U.S. Treasury Bond in bonds.
A deep discount bond is a debt security that sells for a substantial amount below its face value, often at a discount of more than 25%. Unlike original issue discount bonds, these bonds were initially issued at their par value but have since declined in market value.
An extendible bond is a type of bond whose maturity date can be extended at the option of all the involved parties. This flexibility can benefit both issuers and investors under certain market conditions.
A financial market is a marketplace where the trading of financial instruments such as stocks, bonds, commodities, and currencies occurs. These markets facilitate the exchange of capital and credit in the economy.
An inverted yield curve is an unusual financial phenomenon where short-term interest rates exceed long-term rates, often seen as a precursor to economic recessions.
M-CATS, or Municipal Certificate of Accrual on Treasury Securities, is a type of zero-coupon bond issued by a municipality. These bonds do not pay periodic interest but are sold at a significant discount to their face value.
A par bond is a bond that is selling at its nominal value or face value. This reflects a situation where the bond's market price is equal to its face value, indicating a good balance between supply and demand as well as market optimism regarding its returns.
A positive yield curve, also known as a normal yield curve, reflects a usual situation where interest rates are higher on long-term debt securities than on short-term debt securities of the same quality, indicating investor expectations for future economic growth.
A tap stock, also known as a 'tap issue' or 'tap security,' is a gilt-edged security reissued in the market when its price reaches a pre-determined level. There are 'short taps' and 'long taps' depending on their maturity dates.
The Yankee Bond Market involves dollar-denominated bonds issued in the United States by foreign banks and corporations. Issuers tap this market when conditions in the U.S. are more favorable compared to other international or domestic bond markets.
