Fixed income

2s10s Spread The difference between 10-year and 2-year Treasury yields, the most-watched signal of recession risk.

3-Month to 10-Year Spread as a Recession Signal Why the 3m/10y spread is the Fed's preferred inversion metric, how it differs from the 2s10s spread, and historical recession predictors.

30/360 vs Actual/365 Day Count: Which Bonds Use Which 30/360 and Actual/365 are the two most common day-count conventions for bond interest accrual. They differ in how they count days and months, affecting yield and accrued interest.

5s30s Spread: What the Long End of the Curve Signals The 5s30s yield curve spread measures expectations for long-term inflation, fiscal supply, and growth. Learn what widens and narrows it, and why traders watch it differently than the 2s10s.

ABS CDO A collateralized debt obligation backed by tranches of asset-backed securities rather than direct loans, magnifying leverage and correlation exposure.

Accreted Value in Municipal Capital Appreciation Bonds Municipal capital appreciation bonds are sold at a deep discount and grow to par maturity. Learn to compute accreted value, understand tax treatment, and assess early sale impact.

Accrued Interest Interest accumulated on a bond between coupon payment dates and whose responsibility is accrued interest.

Accrued Interest The interest earned but not yet paid on a bond when it is traded between coupon dates.

Accrued Interest on a Bond: How It Is Calculated Accrued interest is the interest owed by a bond seller to the buyer for the time between the last coupon payment and the sale date, calculated using a day-count convention.

Advance Refunding Bonds Refunding bonds issued before the call date of the original debt, allowing issuers to lock in lower rates by escrow and later redemption.

Agency Discount Note A short-term debt instrument sold at a discount by government-sponsored enterprises to manage daily funding needs.

Airport Revenue Bonds How airport revenue bonds finance capital projects through landing fees and concession revenues, and how passenger traffic risk affects credit quality.

Alternative Minimum Tax and Municipals Treatment of certain municipal bonds under the AMT income calculation and loss of tax-exempt status.

Amortizing Bond A bond that repays principal in scheduled installments over its life, reducing investor risk of a single maturity bullet.

AMT Exemption and Private Activity Bonds: What Investors Need to Know Learn which private activity bonds are exempt from the alternative minimum tax, how the AMT add-back works, and whether a tax-exempt muni truly avoids the AMT.

Asset-Backed Commercial Paper Short-term securities backed by pools of receivables or other assets, offering higher yields than unsecured paper.

Asset-Backed Security An asset-backed security is a debt instrument collateralized by a pool of income-producing assets such as auto loans, credit card receivables, or equipment leases.

Auto Loan ABS vs Credit Card ABS: Key Differences Auto loan ABS and credit card ABS differ fundamentally in structure, amortization, prepayment risk, and cash flow timing. Learn the key distinctions.

Bank Discount Yield A yield calculation method used for short-term instruments like T-bills and commercial paper, based on face value and a 360-day year.

Banker's Acceptance Short-term credit instrument guaranteed by a bank, used in international trade to bridge payment timing gaps.

Barbell vs. Bullet Strategy Two portfolio constructions for bonds: concentrating at curve extremes (barbell) or the middle (bullet), each with distinct yield, duration, and convexity trade-offs.

Basis in Bond Trading A unit of measurement equal to 0.01% used to quote small changes in bond yields and prices.

Basis Point Value of a Bond: Definition and Calculation Basis point value (BPV) or DV01 measures the dollar price change for a one-basis-point yield move, essential for hedging and risk management.

Bear Flattener: What It Means for Bond Investors A bear flattener flattens the yield curve through rising short rates while long rates stay flat or fall. Understand its cause and impact on bond portfolios.

Bear Steepener A yield curve shift where long-term bond yields rise faster than short-term yields, widening the maturity spread while inflicting losses on long-duration bond portfolios.

Bear Steepening and Inflation Expectations: The Mechanism How rising inflation expectations drive yield curve steepening: long yields rise while short rates stay anchored, the specific mechanism and market dynamics.

Bearer Bond A bond issued as a physical certificate owned by whoever holds it, nearly extinct due to tax-evasion risk and regulatory crackdown.

Benchmark Bond A widely-traded government security that serves as the reference rate for pricing all other similar-maturity bonds in the market.

Bond A bond is a tradeable IOU—a promise to repay borrowed money with interest on a set schedule. Bonds have fixed coupons, a maturity date, and prices that move inversely to interest rates.

Bond Accrued Interest The portion of the next coupon payment owed to the seller of a bond when it's sold between coupon dates, calculated pro rata for the holding period.

Bond Anticipation Notes Short-term municipal notes issued by a public entity in advance of a planned permanent bond, used to fund capital projects or cover temporary cash gaps.

Bond Basics Principal, coupon, and maturity fundamentals that define how bonds work and how they return cash to investors.

Bond Callability The issuer's contractual right to redeem (call back) a bond before its maturity date, typically exercised when interest rates fall.

Bond Convexity in Plain Language Understand bond convexity as the curvature in the price-yield relationship, and why it matters more in volatile rate environments.

Bond Covenants Restrictions and promises written into a bond contract that limit the issuer's financial and operational actions to protect bondholders.

Bond Covenants and Investor Protection: How Indenture Restrictions Work Bond covenants are contractual restrictions in indentures that protect bondholders by limiting issuer actions. Learn how affirmative and negative covenants reduce default risk and differ from equity protections.

Bond Credit Event A material adverse change in an issuer's credit quality, such as default, bankruptcy, restructuring, or rating downgrade, that triggers bond market repricing.

Bond Credit Rating Scales: Investment Grade vs Speculative Grade Understand Moody's, S&P, and Fitch bond rating scales, the investment-grade cutoff, and how rating notches affect bond prices and investor eligibility.

Bond Duration Explained: What It Measures and Why It Matters Understand what bond duration measures, how to interpret the number, and why longer-duration bonds carry greater interest-rate risk.

Bond Duration Risk Bond duration risk is the risk that a bond's price will fall if interest rates rise. It is measured by the bond's duration — the weighted average time to receive cash flows.

Bond Duration vs Maturity: What Is the Difference? Bond duration vs maturity difference: maturity is the repayment date; duration is the weighted-average time to receive cash flows, which determines price sensitivity to interest-rate changes.

Bond Equivalent Yield Calculation Learn how to calculate bond equivalent yield from discount or money-market yields, with step-by-step formula and worked examples.

Bond Equivalent Yield Explained Bond equivalent yield annualizes the discount instrument return to a semi-annual basis for apples-to-apples comparisons with coupon bonds.

Bond Equivalent Yield vs Effective Annual Yield Understand bond equivalent yield vs effective annual yield: BEY annualizes semiannual coupons, EAY accounts for compounding. Learn when each applies and how to convert.

Bond Immunization Strategy Explained Bond immunization insulates a portfolio from interest-rate risk by matching duration to the investment horizon. Learn how it works and its limits.

Bond Indenture A legally binding contract between a bond issuer and bondholders that specifies repayment terms, covenants, and the rights of both parties.

Bond Indenture The legal contract governing a bond's payment terms, covenants, trustee duties, and bondholder rights and protections.

Bond Issue Size The total principal amount of bonds a company issues in a single offering, affecting market liquidity, trading spreads, and investor accessibility.

Bond Ladder A strategy of holding bonds with staggered maturity dates to reduce timing risk and provide regular income.

Bond Ladder Strategy Across the Yield Curve How a bond ladder distributes maturities across the yield curve to manage reinvestment risk and adapt to changing rate environments.

Bond Ladder Strategy Explained Learn how bond ladders manage reinvestment risk and liquidity by staggering maturities, with a concrete five-rung example.

Bond Laddering vs Bullet Strategy: Which Fits Your Goals Compare bond ladder vs bullet strategy: spreading maturities reduces reinvestment risk; concentrating them targets a date. Learn when each works best.

Bond Liquidity Risk for Retail Investors Bond liquidity risk is the cost and delay of selling before maturity. Wide bid-ask spreads and infrequent trading hit retail investors hard.

Bond Market Liquidity The ease and speed with which bonds can be bought and sold without significantly affecting their price.

Bond Maturity The date on which a bond issuer must repay the principal (par value) to the bondholder, ending the bond's life.

Bond Price Change from a Parallel Yield Curve Shift How to estimate bond price changes when all yields shift by the same amount, using duration and convexity to calculate price and percentage impact.

Bond Price Formula Present value calculation of coupon payments and principal repayment discounted at market yield.

Bond Rating Downgrade A reduction in a bond's credit rating by a rating agency, reflecting deteriorating issuer creditworthiness and typically causing the bond to trade at higher yields.

Bond Refunding The process of issuing new debt to repay maturing or callable bonds, typically done to lower interest costs or extend maturity.

Bond Reinvestment Risk Explained Bond reinvestment risk is the danger that falling interest rates force coupon payments to be reinvested at lower yields, reducing total return below the bond's stated yield-to-maturity.