Redemption cushion

Similar financial terms

Redemption charge
The commission charged by a mutual fund when redeeming shares. For example, a 2% redemption charge (also called a "back end load") on the sale of shares valued at €1000 will result in payment of €980 (or 98% of the value) to the investor. This charge may decrease or be eliminated as shares are held for longer time periods.

Preferred equity redemption stock (PERC)
Preferred stock that converts automatically into equity at a stated date. A limit is placed on the value of the shares the investor receives.

Optimal redemption provision
Provision of a bond indenture that governs the issuer's ability to call the bonds for redemption prior to their scheduled maturity date.

Mandatory redemption schedule
Schedule according to which sinking fund payments must be made.

Redemption Fee
A charge assessed against an invetor for redeeming shares or interests in a fund. Often this charge is used for early or premature withdrawals. This feature is more common for funds investing in illiquid securities or emerging market funds and annuity products.

Safety cushion
In a contingent immunization strategy, the difference between the initially available immunization level and the safety-net return.

Cushion bonds
High-coupon bonds that sell at only at a moderate premium because they are callable at a price below that at which a comparable non-callable bond would sell. Cushion bonds offer considerable downside protection in a falling market.