U.S. Treasury bond

Similar financial terms

Acquisition
The purchase of a controlling interest in a firm, generally via a tender offer for the target shares.

Bourse
The French term for a stock exchange

U.S. Dollar Index
The U.S. dollar index is a trade-weighted index of the values of six foreign currencies. At the moment, the index consists of euros (EUR), Japanese yen (JPY), British pounds (GBP), Canadian dollars (CAD), Swedish kronas (SEK) and Swiss francs (CHF).

Ombudsman
The ombudsman (comes from Norwegian "ombudsmann" for a person who looks after the government's assets) is an independent official who investigates the complaints of individuals against companies or public authorities. Ombudsmen do not have any formal power to reverse decisions but they have substantial moral authority over companies or national or local government agencies.

Within financial services, there are different Ombudsmen for banking, building societies, insurance, pensions, and ...

Acquisition of assets
A merger or consolidation in which an acquirer purchases the selling firm's assets.

Acquisition of stock
:A merger or consolidation in which an acquirer purchases the acquiree's stock.

Without recourse
Without the lender having any right to seek payment or seize assets in the event of default from anyone other than the party (such as a special-purpose entity) specified in the debt contract.

Winners's curse
Problem faced by uninformed bidders. For example, in an initial public offering uninformed participants are likely to receive larger allotments of issues that informed participants know are overpriced.

Vertical acquisition
Acquisition in which the acquired firm and the acquiring firm are at different steps in the production process.

U.S. Treasury note
U.S. government debt with a maturity of one to 10 years.

U.S. Treasury bill
U.S. government debt with a maturity of less than a year.

Upstairs market
A network of trading desks for the major brokerage firms and institutional investors that communicate with each other by means of electronic display systems and telephones to facilitate block trades and program trades.

Unsystematic risk
Also called the diversifiable risk or residual risk. The risk that is unique to a company such as a strike, the outcome of unfavorable litigation, or a natural catastrophe that can be eliminated through diversification.

Unsterilized intervention
Foreign exchange market intervention in which the monetary authorities have not insulated their domestic money supplies from the foreign exchange transactions.

Unsecured debt
Debt that does not identify specific assets that can be taken over by the debtholder in case of default.

Unseasoned issue
Issue of a security for which there is no existing market.

Taxable acquisition
A merger or consolidation that is not a tax-fee acquisition. The selling shareholders are treated as having sold their shares.

Tax free acquisition
A merger or consolidation in which (a) the acquirer's tax basis in each asset whose ownership is transferred in the transaction is generally the same as the acquiree's, and (b) each seller who receives only stock does not have to pay any tax on the gain he realizes until the shares are sold.

Substitution swap
A swap in which a money manager exchanges one bond for another bond that is similar in terms of coupon, maturity, and credit quality, but offers a higher yield.

Substitute sale
A method for hedging price risk that utilizes debt-market instruments, such as interest rate futures, or that involves selling borrowed securities as the primary assets.

Subsidiary
With the regards to the euromarkets, a subsidiary is foreign-based affiliate that is a separately incorporated entity under the host country's law.

Subscription price
Price that the existing shareholders are allowed to pay for a share of stock in a rights issue.

Specific issues market
The market in which dealers reverse in securities they wish to short.

Small issues exemption
Securities issues that involve less than $1.5 million are not required to file a registration statement with the SEC. Instead, they are governed by Regulation A, for which only a brief offering statement is needed.

Remote disbursement
Technique that involves writing checks drawn on banks in remote locations so as to increase disbursement float.

Recourse
Term describing a type of loan. If a loan is with recourse, the lender has a general claim against the parent company if the collateral is insufficient to repay the debt.

Perquisites
Personal benefits, including direct benefits, such as the use of a firm car or expense account for personal business, and indirect benefits, such as up-to-date office décor.

Oversubscription privilege
In a rights issue, arrangement by which shareholders are given the right to apply for any shares that are not taken up.

Oversubscribed issue
Investors are not able to buy all of the shares or bonds they want, so underwriters must allocate the shares or bonds among investors. This occurs when a new issue is underpriced or in great demand because of growth prospects.

Outstanding shares
Shares that are currently owned by investors.

Outstanding share capital
Issued share capital less the par value of shares that are held in the company's treasury.

Outsourcing
The practice of purchasing a significant percentage of intermediate components from outside suppliers.

Offshore finance subsidiary
A wholly owned affiliate incorporated overseas, usually in a tax haven country, whose function is to issue securities abroad for use in either the parent's domestic or its foreign business.

Nonrecourse
Without recourse, as in a non-recourse lease.

New-issues market
The market in which a new issue of securities is first sold to investors.

Mangement's discussion
A report from management to the shareholders that accompanies the firm's financial statements in the annual report. This report explains the period's financial results and enables management to discuss other ideas that may not be apparent in the financial statements in the annual report.

Limitation on subsidiary borrowing
A bond covenant that restricts in some way a firm's ability to borrow at the subsidiary level.

Oversubscription
An oversubscription of shares on an IPO means that there was much more demand than supply of shares on an initial offering.

Controlled disbursement
A service that provides for a single presentation of checks each day (typically in the early part of the day).

Corporate acquisition
The acquisition of one firm by anther firm.

Debt outstanding subject to limitation
Obligations incurred by the Treasury subject to the statutory limit set by Congress. Until World War 1, a specific amount of debt was authorized for each separate security issue. Beginning with the Second Liberty Loan Act of 1917, the nature of the limitation was modified until, in 1941, it developed into an overall limit on the outstanding Federal debt. The statuatory limit may change from year to year.

Unsterilized foreign exchange intervention
A unsterilized foreign exchange intervention is an intervention in which a central bank allows the purchase or sale of domestic currency to affect the monetary base.

Undersubscribed
Having received fewer offers to buy than there are securities available for sale.

Extinguish
Retire or pay off debt.

Gunslinger
An aggressive portfolio manager who makes risky investments, typically in margin accounts, in search for large returns.

Quasi-rent
Short-term economic rent arising from a temporary inelasticity of supply.

Subsidy
A financial contribution by government (including any form of income or price support) that also confers a benefit to the recipient (i.e., producers of goods or services or buyers of goods). Many types of government practices constitute a financial contribution, including traditional forms of subsidies such as grants and loans, as well as foregone revenues such as tax credits. Subsidies may also exist in preferential government procurement of goods.

Treasury sector
Securities issued by the U.S. government. Includes Treasury bills, notes and bonds. The U.S. Treasury is the largest issuer of securities in the world. This sector plays a key role in the valuation of securities and the determination of interest rates throughout the world.

Treasury Bill
A short-term debt instrument issued by the government to finance its budget. Treasury bills has usually no coupon attached to it.

Treasury Bond
A long-term debt instrument issued by the government to finance its budget. Treasury Bond coupons are usually paid semi-annually in the US and annually in the UK.

Treasury Bills
Treasury Bills refers to very short term debt instruments issued by the Bank of England on behalf of the UK Government. They are negotiable, bearer, zero-coupon debt instruments. The maturity of T-Bills ranges from one month (approx. 28 days), 3 months (approx 91 days), 6 months (approx. 182 days) to 12 months (up to 364 days). The minimum face value (since October 2001) is £25,000. T-Bills are widely considered to be risk-free.

Treasury stock
Common stock that has been repurchased by the company and held in the company's treasury.

Treasury securities
Securities issued by the U.S. Department of the Treasury.

Plain vanilla bond
A typical ‘plain vanilla’ bond issued in the United States specifies (a) a fixed date (maturity or expiry date) when the amount borrowed (the principal or face value) is due, and (b) the contractual amount of interest which typically is paid every six months in the US and once a year on the European continent. A plain vanilla bond has a known cash flow pattern.

Bond
A bond is a debt instrument requiring the issuer (also called the debtor or borrower) to repay to the lender/investor the amount borrowed plus interest (coupons) over a specified period of time.

Bond indenture
A contract or agreement between the issuer and the bondholder, which sets forth all the obligations of the issuer.

Short-term bonds
Bonds with a maturity of between one and five years.

Medium-term or intermediate-term bonds
Bonds with a maturity of between five and twelve years.

Long-term bonds
Bonds with a maturity of more than 12 years.

Zero-coupon bonds
The holder of a zero-coupon bond realizes interest by buying the bond at a discount to its principal value. These bonds made their debut in the U.S. bond market in the early 1980s.

Deferred-coupon bonds
Bonds that let the issuer avoid using cash to make interest payments for a specified number of years. There are three types of deferred-coupon structures: (a) deferred-interest bonds, (b) step-up bonds and (c) payment-in-kind bonds.

Call feature on bonds
A call feature grants the issue the right to retire the debt, fully or partially, before the scheduled maturity date. Inclusion of a call feature benefits bond issuers by allowing them to replace an old bond issue with a lower-interest cost issue if interest rates in the market fall.

Put provision on bonds
A put provision grants the bondholder the right to sell the issue back to the issuer at par value on designated dates. Here the advantage to the investor is that if interest rates rise after the issue date, thereby reducing a bond’s price, the investor can force the issuer to redeem the bond at par value.

Convertible bond
An issue giving the bondholder the right to exchange the bond for a specified number of shares of common stock. This feature allows the bondholder to take advantage of favourable movements in the price of the issuer’s common stock.

Exchangeable bond
An issue giving the bondholder the right to exchange the issue for a specified number of common stock shares of a corporation different from the issuer of the bond.

Interest-rate risk on bonds
The price of a typical bond will change in the opposite direction from a change in interest rates. As interest rates rise, the price of a bond will fall; as interest rates fall, the price of a bond will rise. The actual degree of sensitivity of a bond’s price to changes in market interest rates depends on various characteristics of the issue maturity, coupon and special provisions.

Reinvestment risk on bonds
Usually, when the yield of a bond is calculated, you assume that the coupons received before maturity are reinvested. The additional income from such reinvestment is sometimes referred to as interest-on-interest which depends on the prevailing interest-rate levels at the time of reinvestment. Volatility in the reinvestment rate of a given strategy because of changes in market interest rates is called reinvestment risk. This risk is that the interest rate at which interim cash flows can be reinve ...

Call risk on bonds
Many bonds include a call feature that allows the issuer to redeem or “call” all or part of the issue before the maturity date. The issuer usually retains this right in order to have flexibility to refinance the bond in the future if the market interest rate drops below the coupon rate. This implies three risks from the investor: (a) The cash flow pattern becomes uncertain, (b) The investor becomes exposed to reinvestment risk because the issuer will call the bond when interest rates drop, and ( ...

Default risk on bonds
Issuers that potentially run into cash flow problems, simultaneously attaches default risk to their bonds if there is uncertainty whether they can afford to pay coupons and principals. Bonds with default risk trade in the market at a price that is lower than comparable U.S. Treasury securities, which are considered free of default risk. Default risk is gauged by quality ratings assigned by recognised rating companies such as Moody’s Investor Service, Standard & Poor’s Corporation, Morningstar an ...

Junk bonds
Bonds that trade below investment grade set by recognised rating companies such as Moody’s Investor Service (Baa3), Standard & Poor’s Corporation (BBB), Morningstar and Fitch IBCA.

Inflation risk on bonds
If investors purchase a bond on which they can realize a coupon rate of 5% but the rate of inflation is 6%, the purchasing power of the cash flow actually has declined. Inflation risk arises because of the variation in the value of cash flows from a security due to inflation, as measured in terms of purchasing power.

Exchange-rate risk on bonds
A non-domestic-currency nominated bond has unknown domestic currency cash flows. The domestic currency cash flows are dependent on the exchange rate at the time the payments are received. For example, suppose that a German investor purchases a bond whose payments are in British pounds (GBP). If pounds depreciate relative to euros (EUR), fewer euros will be received and vice versa. This risk is also referred to currency risk.

Liquidity risk on bonds
The primary measure of liquidity is the size of the bid-ask spread. Liquidity risk depends on the ease with which an issue can be sold at or near its value. It follows that the wider the dealer spread, the more liquidity risk.

Eurobond
An international bond sold primarily in countries other than the country in whose currency the issue is denominated

Brady bonds
Brady bonds are issued by emerging countries under a debt-reduction plan named after former U.S. Secretary of the Treasury Nicholas Brady. Brady bonds were set up in association with the IMF and World Bank to sponsor the restructuring of outstanding sovereign loans and interest arrears into liquid debt instruments.

Conventional bonds
The conventional bonds form the largest part of the UK gilt market. 73% of bonds oustanding are in this form. COnventional bonds have a fixed coupon and a bullet (i.e. a fixed) maturity. Current coupons range from 2% to 13.5%. At the moment (2004), the longest outstanding maturity is 2036.

Irredeemable bonds
Bonds with a fixed maturity but not subject to prior redemption; bonds that cannot be called for redemption by the issuer (payer or obligor) before maturity. They should not be confused with perpetual bonds or intermediate bonds. UK Irredeemable (undated) bonds have no final maturity date. They are callable by the government at any time within 3 months. As their coupons range between 2.5% and 4% they are unlikely to be called. War loan, issued by the UK government during the First World War ...

Yankee bonds
Yankee bonds are issued by foreign governments and corporations, are generally dollar denominated, trade in the U.S., and must register with the Security and Exchange Commission. Issuers in the Yankee bond market are predominately highly-rated sovereign, or sovereign guaranteed issuers, although foreign corporations and financial institutions have increased issuance of Yankee bonds over the last decade.

Issuance in the Yankee bond market is dependent on U.S. interest rates, and the valu ...

Matador bonds
Foreign bonds issued in Spain.

Rembrandt bonds
Foreign bonds issued in Netherlands.

Samurai bonds
Foreign bonds issued in Japan.

Bulldog bonds
Foreign bonds issued in the United Kingdom.

Shogun bonds
Shogun bonds consist of foreign-currency bonds issued in Tokyo in currencies other that Japanese yen (JPY).

Yankee ECU bonds
Yankee ECU bonds refers to foreign-currency bonds issued in New York or Chicago in currencies other that US dollar.

Bond ratio
A ratio showing the portion of total capitalization represented by bonds. To compute the ratio, dived the dollar value of bonds by total capitalization; the result is expressed as a percentage

Z bond
Also known as an accrual bond or accretion bond; a bond on which interest accretes interest but is not paid currently to the i nvestor but rather is accrued, with accrual added to the principal balance of the Z and becoming payable upon satisfaction of all prior bond classes.

Accrual bond
A bond on which interest accrues, but is not paid to the investor during the time of accrual. The amount of accrued interest is added to the remaining principal of the bond and is paid at maturity.

Variable rated demand bond
Variable rated demand bond (VRDB) is a floating rate bond that can be sold back periodically to the issuer.

Term bonds
Often referred to as bullet-maturity bonds or simply bullet bonds, bonds whose principal is payable at maturity.

Sushi bond
A eurobond issued by a Japanese corporation.

Subordinated debenture bond
An unsecured bond that ranks after secured debt, after debenture bonds, and often after some general creditors in its claim on assets and earnings. Related: Debenture bond, mortgage bond, collateral trust bonds.

Stripped bond
Bond that can be subdivided into a series of zero-coupon bonds.

Stratified sampling bond indexing
A method of bond indexing that divides the index into cells, each cell representing a different characteristic, and that buys bonds to match those characteristics.

Step-up bond
A bond that pays a lower coupon rate for an initial period which then increases to a higher coupon rate.

Speculative grade bond
Bond rated Ba or lower by Moody's, or BB or lower by S&P, or an unrated bond.

Single-payment bond
A bond that will make only one payment of principal and interest.

Short bonds
Bonds with short current maturities.

Series bond
Bond that may be issued in several series under the same indenture.

Serial bonds
Corporate bonds arranged so that specified principal amounts become due on specified dates.

Revenue bond
A bond issued by a municipality to finance either a project or an enterprise where the issuer pledges to the bondholders the revenues generated by the operating projects financed, for instance, hospital revenue bonds and sewer revenue bonds.

Registered bond
A bond whose issuer records ownership and interest payments. Differs from a bearer bond which is traded without record of ownership and whose possession is the only evidence of ownership.

Refunded bond
Also called a prerefunded bond, one that originally may have been issued as a general obligation or revenue bond but that is now secured by an "escrow fund" consisting entirely of direct U.S. government obligations that are sufficient for paying the bondholders.

Put bond
A bond that the holder may choose either to exchange for par value at some date or to extend for a given number of years.

Pure-discount bond
A bond that will make only one payment of principal and interest. Also called a zero-coupon bond or a single-payment bond.

Premium bond
A bond that is selling for more than its par value.

Positive covenant (of a bond)
A bond covenant that specifies certain actions the firm must take. Also called an affirmative covenant.

Payment-In-Kind (PIK) bond
A bond that gives the issuer an option (during an initial period) either to make coupon payments in cash or in the form of additional bonds.

Municipal bond
State or local governments offer muni bonds or municipals, as they are called, to pay for special projects such as highways or sewers. The interest that investors receive is exempt from some income taxes.

Mortgage bond
A bond in which the issuer has granted the bondholders a lien against the pledged assets. Collateral trust bonds

Mismatch bond
Floating rate note whose interest rate is reset at more frequent intervals than the rollover period (e.g. a note whose payments are set quarterly on the basis of the one-year interest rate).

Low-coupon bond refunding
Refunding of a low coupon bond with a new, higher coupon bond.

Long bonds
Bonds with a long current maturity. The "long bond" is the 30-year U.S. government bond.

Limited-tax general obligation bond
A general obligation bond that is limited as to revenue sources.

Level-coupon bond
Bond with a stream of coupon payments that are the same throughout the life of the bond.

Bearer bond
Bonds that are not registered on the books of the issuer. Such bonds are held in physical form by the owner, who receives interest payments by physically detaching coupons from the bond certificate and delivering them agent.to the paying

Bond agreement
A contract for privately placed debt.

Bond covenant
A contractual provision in a bond indenture. A positive covenant requires certain actions, and a negative covenant limits certain actions.

Bond equivalent yield
Bond yield calculated on an annual percentage rate method. Differs from annual effective yield.

Bond indexing
Designing a portfolio so that its performance will match the performance of some bond index.

Bond points
A conventional unit of measure for bond prices set at $10 and equivalent to 1% of the $100 face value of the bond. A price of 80 means that the bond is selling at 80% of its face, or par value.

Bond value
With respect to convertible bonds, the value the security would have if it were not convertible apart from the conversion option.

Bond-equivalent basis
The method used for computing the bond-equivalent yield.

Bond-equivalent yield
The annualized yield to maturity computed by doubling the semiannual yield.

BONDPAR
A system that monitors and evaluates the performance of a fixed-income portfolio , as well as the individual securities held in the portfolio. BONDPAR decomposes the return into those elements beyond the manager's control--such as the interest rate environment and client-imposed duration policy constraints--and those that the management process contributes to, such as interest rate management, sector/quality allocations, and individual bond selection.

Bull-bear bond
Bond whose principal repayment is linked to the price of another security. The bonds are issued in two tranches: in the first tranche repayment increases with the price of the other security, and in the second tranche repayment decreases with the price of the other security.

Collateral trust bonds
A bond in which the issuer (often a holding company) grants investors a lien on stocks, notes, bonds, or other financial asset as security.

Completion bonding
Insurance that a construction contract will be successfully completed.

Conflict between bondholders and stockholders
These two groups may have interests in a corporation that conflict. Sources of conflict include dividends, distortion of investment, and underinvestment. Protective covenants work to resolve these conflicts.

Convertible bonds
Bonds that can be converted into common stock at the option of the holder.

Convertible eurobond
A eurobond that can be converted into another asset, often through exercise of attached warrants.

Corporate bonds
Debt obligations issued by corporations.

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.

Blanket fidelity bond
SEC-required insurance coverage that brokerage firms are required to have in order to cover fraudulent trading by employees.

General Obligation Bonds
Securities issued by municipalities. The source of revenue to pay the interest and principal is taxes. These securities are also known as full faith and credit issues because they depend on the municipality's capacity to tax. These issues are often considered to be more stable than Revenue Bonds.

Strip Bonds
The capital portion of a bond from which the coupons have been stripped. The holder of the strip bond is entitled to its par value at maturity, but not the annual interest payments.