Bonds are IOUs issued by borrowers to lenders. These instruments come in various forms and are typically used by governments, local authorities, or companies to raise funds, offering fixed or variable interest rates and different terms.
Debt service refers to the cash required in a given period, usually one year, for payments of interest and current maturities of principal on outstanding debt. This includes obligations from mortgage loans, corporate bond issues, and government bonds. Understanding debt service is crucial for assessing the financial stability and repayment ability of an individual or entity.
Stocks and bonds that are exempt from certain Securities and Exchange Commission (SEC) and Federal Reserve Board (FRB) rules. Examples include government and municipal bonds, which are exempt from SEC registration requirements and FRB margin rules.
Fixed-income investments are financial instruments that provide a fixed rate of return in the form of periodic interest or dividends until maturity.
Full faith and credit refer to the comprehensive commitment of a government entity to use its taxing and borrowing power and other revenue sources to ensure the payment of interest and principal on its issued bonds.
A mutual fund designed to produce current income for shareholders through interest, dividends, or other income streams.
Index-linked gilt refers to a type of government bond issued by the UK in which both the interest payments and the redemption value are adjusted in line with inflation, as measured by the Retail Price Index (RPI).
An overview of the London International Financial Futures and Options Exchange (LIFFE) which provides facilities for trading in options and futures contracts including those on government bonds, share indexes, foreign currencies, and interest rates.
Noncompetitive bids are a method for smaller investors to purchase U.S. Treasury bills. These bids are submitted through a Federal Reserve Bank, the Bureau of the Public Debt, or certain commercial banks, and are executed at the average price of all accepted competitive bids.
A Patriot Bond is a special designation given to the Series EE Savings Bond following the terrorist attacks on the World Trade Center on September 11, 2001.
A presold issue refers to the issuance of municipal bonds or government bonds that is completely sold out before the price or yield is publicly announced. This typically happens through prerelease sales to institutional investors.
Quantitative Easing (QE) is a monetary policy used by central banks to stimulate the economy when conventional monetary policy becomes ineffective. Primarily enacted during periods of low or zero interest rates, QE involves the creation of new money electronically to purchase government securities and increase the money supply.
A financial obligation whose interest is exempt from taxation by federal, state, and/or local authorities.
TreasuryDirect is an electronic platform that allows individual investors to purchase U.S. Treasury securities directly from the government, thus bypassing intermediaries like banks and brokers.
TIGERs (Treasury Investors Growth Receipts) are U.S. government-backed bonds stripped of their coupons and sold separately at a deep discount.
Intermediate-term (one to 10 years) obligation of the U.S. government that bears interest paid by coupon. Treasury notes carry the highest domestic credit standing and have the lowest taxable yield available at equivalent maturity.
