Retractable bonds are also called putable bonds or simply put bonds. These bonds come with an additional feature of put option attached with the straight bonds. The put option allows the bondholder to retract principal investment made in the bond. Bond issuers also hold the right to retract the bond in some cases. However, usually, […]

Extendable bonds come with an option to extend the maturity date of the original bond. The extension can be exercised either by the bond issuer, bondholder, or both, depending on the terms specified. Extendable bonds provide flexible options to both the investor and bondholder. The arrangement can be set to exercise the extension option, once

Eurobonds are commercial bonds that are issued in a currency other than the home currency of the issuer. The bond can be issued in the same country or a foreign country. However, the currency of the bond will be different from the issuer’s base currency. The term “euro” in the name does not specify the

Zero-coupon bonds do not offer periodic interest payments like coupon bonds. They offer zero-interest payments periodically. The only cash inflow for the investor comes at the bond maturity through principal repayment. These bonds are issued at a deep discount to attract investors since they do not offer periodic interest payments. Definition A zero-coupon bond is

Mortgage Bonds are secured by a mortgage or a pool of mortgages that are backed by collateral such as real estate property. The collateral backing makes mortgage bonds secured form of investment. The collateral can include both residential and commercial real estate properties. Definition A mortgage bond is secured by a mortgage that is typically

Junk bonds are common bonds issued with high-risk ratings by credit rating agencies. These bonds carry a higher risk of default than other bonds. A higher risk of default means a higher yield on investment; hence these bonds are also called high-yield bonds. These bonds work similarly to any other commercial bond. Bond issuers of

Floating rate bonds or floaters come with variable interest rates. Unlike fixed interest rate bonds, these bonds offer variable returns on investments. The variable interest rates adjust periodically with the Fed Funds Rate or LIBOR. These bonds can adjust interest rates on a daily, weekly, monthly, or quarterly basis. Deeper Definition Traditionally, bonds are considered

A collateral trust bond is secured by the issuer’s security instruments held with a trustee. These securities can include stocks, bonds, and notes to name a few. The issuer grants a lien to the investor in a collateral trust bond. Collateral trust bonds are secured financial instruments as they come with collateral. The value of