Bond Education Center

  • Accrued Interest
    Accrued interest is the amount of interest that a bond has earned since its last coupon payment.
  • Arbitrage Capital Asset Pricing Model
    Methods for utilizing the Capital Asset Pricing Model to indentify abitrage opportunities
  • Asset Backed Securities
    Learn all about asset backed securities including how they differ from MBS securities.
  • Basis Points
    The term Basis Point (bp) was created to account for fractional changes in bond yields. Since large institutional bond traders can make or lose hundreds of thousands of dollars on fractional moves in interest rates, they divide each percentage point by 100 to gain a more granular level of analysis
  • Bond
    Learn about the basic components of a bond such as coupon payments, bond indentures, prospectus, and bond issuers.
  • Bond Convexity
    Bond convexity describes the relationship between price and yield of a bond
  • Bond Coupon
    A bond coupon refers to the periodic interest payments that a bond holder receives for purchasing a bond
  • Bond Duration
    Duration is the weighted average term to maturity of a bonds cash flows. Duration helps quantify an bonds sensitivity to interest rate shocks.
  • Bond Investing Strategies
    Bond Ladders, barbells, and bullets are strategies that will help the investor balance their bond portfolios
  • Bond Math
    Learn the basics in bond pricing analytics - cash flows, yield, and total return
  • Bond Price Volatility
    Bond Prices are inversely related to interest rates
  • Callable Bond
    A callable bond gives the bond issuer the right to purchase the bond back from the bond holder before the maturity date of the bond
  • Commercial Paper
    Commercial paper are short term unsecured notes issued in the open market by corporations who have immediate financing needs
  • Consumer Price Index
    The consumer price index, aka. CPI, is the key gauge for inflation; it measures price increases and decreases on common group of consumer goods and services on a monthly basis
  • Convertible Bonds
    A convertible bond gives gives its owner the right to acquire the issuers common stock directly rather than purchasing it in the open market
  • Corporate Bonds
    A corporate bond is a debt security issued by a corporation and sold to investors to raise operating capital
  • Credit Crisis Conclusion
  • Credit Crisis lbos sivs
  • Credit Market Meltdown
    Read Part 1 of the Credit Market Crisis analysis at mysmp.com.  The Credit market meltdown began with sub-prime mortgages.
  • Credit Rating
    A credit rating allows borrowers to understand the financial health of the debt issuing corporation.  Moody's and S&P are the two major credit agencies.
  • Discount Rate
    Discount rate refers to the interest rate at which depository institutions can borrow funds from the FED.
  • Economic Recession
    A recession is used to describe a situation in which a country's GDP sustains a negative growth factor for at least 2 consecutive quarters.
  • Federal Funds Rate
    The federal funds rate is the average interest rate at which the banks lend money to each other.
  • Federal Reserve Bank
    The federal reserve bank acts as the central bank for the United States.  Learn about how it is organized. 
  • gdp
    The gross domestic product, or GDP, is the total value of a nations goods and services produced within a preset period of time
  • High Yield Bonds
    Learn about what a high yield bond is and understand the different types such as plain vanilla fixed rate, rule 144a securities, split-coupon securities, payment-in-kind-securities, and step-ups
  • Inflation
    The measure of price increases within a set of goods and services over a period of time is known as inflation.
  • Interest Rate Swap
    An interest rate swap is a contractual agreement to exchange periodic interest payments
  • Inverted Yield Curve
    An inverted yield curve refers to a phenomena in the bond markets where bond securities with shorter maturities actually have higher yields than bonds with longer term maturities with similar credit qualities
  • LIBOR
    The London Interbank Offered Rate, or LIBOR, is the European version of the federal funds rate in the United States and represents the interest rate at which London banks charge each other on funds borrowed
  • Maturity Date
    The maturity date of a bond is the date when the bond holder will return the bond security back to the bond issuer and the final coupon payment and principal value of the bond is returned back to the bond holder.
  • Monetary Indicators
    A monetary indicator focuses on economic data to gauge the current health of the market.
  • Mortgage Crisis
    Morgage Markets on Wall Street in turmoil
  • Treasury Bonds
    Treasury Bonds are issued by the United States government and are considered risk free bonds.
  • Treasury Inflation Protected Securities
    Treasury inflation protected securities are government backed bonds that protect the bond holder against inflation by increasing the principal value of the bond by the rate of inflation.
  • Underwriting
    Underwriting bond securities is a process by which lenders assess the credit worthiness of borrowers in order to provide them with their funding needs.
  • Yield Curve
    The yield curve defines the relationship between bond duration and yields. 
  • Zero Coupon Bonds
    Zero Coupon bonds have no coupon payments and are sold at a deep discount to par and then redeemed at par