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Chapter 19. Working with Bonds > Glossary of Bond Terms

Glossary of Bond Terms

Before beginning, here are a few bond terms that you'll see throughout the next few sections and that you should be familiar with:

  • Coupon— The interest rate paid by the bond.

  • Coupon dates— The dates on which the bond pays the coupon interest. Most bonds have two coupon dates each year: One is usually the anniversary of either the issue date or the first coupon date, and the other is the date 6 months later.

  • Discount bond— A bond with a market price below its par value.

  • Face value— The amount borrowed, which is usually $1,000 per bond. Also called the par value.

  • First coupon date— The date on which the first coupon interest payment is made.

  • Issue date— The date the bond is made available to the public.

  • Issuer— The company or government borrowing the money.

  • Last coupon date— The date on which the last coupon interest payment is made.

  • Maturity date— The date on which the bond expires and the issuer agrees to repay the amount borrowed, as well as any accrued interest.

  • Premium bond— A bond with a market price above its par value.

  • Settlement date— The date on which the bond is purchased.

  • Yield— The rate of return the investor gets from the purchase date to the maturity date. Also called the yield-to-maturity, or YTD.)

  • Zero-coupon bond— A bond that doesn't pay interest but that is sold at a deep discount. Also called zeros.


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