Fixed income

Eurodollar Deposit Dollar-denominated deposits held outside the United States that fund global short-term lending and form the backbone of offshore dollar markets.

Ex-Date vs. Record Date for Corporate Bond Coupon Payments Corporate bonds have ex-date and record-date mechanics that differ from equities, affecting who receives coupon payments and settlement timing.

Excess Spread The difference between the interest rate earned on securitized collateral and the sum of rates paid to bondholders and servicing fees, flowing to the originator or equity holder.

Expected Loss Rating vs Probability of Default Rating How Moody's expected loss rating differs from probability-of-default ratings by S&P and Fitch, and why it matters for structured products.

Fallen Angel A bond originally rated investment grade that has been downgraded into speculative-grade territory, signalling deteriorating issuer creditworthiness.

Fallen Angel Bond An investment-grade bond downgraded to speculative grade, creating forced-selling waves and temporary mispricings.

Federal Funds Market Overnight lending market where banks exchange reserve balances at the federal funds rate, the primary lever of monetary policy.

Federal Funds Rate and Bonds How the Federal Reserve's target interest rate influences Treasury yields, bond prices, and the broader fixed-income market.

First-Loss Tranche in Structured Finance First-loss tranches absorb initial credit losses in securitizations. Learn how they protect rated tranches and drive the risk-return profile for equity investors.

Fitch Revision An adjustment to a Fitch Ratings outlook or credit rating that signals the rating agency's changing view of an issuer's credit risk.

Flat Price vs Full Price in Bond Markets Bonds are quoted at flat (clean) price but settle at full (dirty) price; accrued interest bridges the gap at any settlement date.

Flight to Quality The systematic reallocation of portfolio risk away from riskier credits toward safer government bonds during periods of economic stress or uncertainty.

Floating Rate Bond Mechanics Bond structure where coupon adjusts periodically based on a reference rate (SOFR, LIBOR, Treasury) plus a fixed spread, isolating interest-rate risk.

Floating-Rate Bond A corporate bond whose coupon adjusts periodically based on a short-term benchmark rate plus a fixed spread, protecting against rising interest rates.

Floating-Rate Bond Features Bonds with coupons that adjust periodically based on a reference interest rate, protecting investors from rising rates.

Foreign Exchange Risk in Bonds The risk that a bond's foreign currency return declines due to exchange-rate depreciation.

Foreign Official Holdings of Treasuries Central banks and foreign governments' ownership of U.S. Treasury securities; a major source of demand shaping yields.

Forward Rate The implied future interest rate embedded between two spot rates on the yield curve.

Forward Rate vs Spot Rate: Key Differences Explained The forward rate vs spot rate difference: spot rates are today's yields for immediate delivery, while forward rates lock in yields for future periods.

Forward Yield Curve The yield curve implied by current spot rates, showing the market's expectation of what interest rates will be in future periods.

Full Price vs. Clean Price Why bonds trade on clean price but settle at the dirty price that includes accrued interest owed to the seller.

GDP-Linked Bond A sovereign debt instrument whose coupon or principal is indexed to national GDP growth, aligning repayment capacity with output.

General Collateral Repo A repurchase agreement settled against any eligible Treasury security, where the interest rate is set by market supply and demand for short-term dollar funding.

General Obligation Bond A general obligation bond is a municipal bond backed by the full taxing authority and credit of the issuing government. GO bonds have priority claim on all revenues, not just those from a specific project.

General Obligation vs Revenue Bond Credit Risk Compares the repayment pledges and default dynamics of general obligation bonds backed by taxing power versus revenue bonds backed by project revenues.

Getting a Credit Rating for a Small Company Bond How small issuers obtain credit ratings: the cost, timeline, process, and alternatives like shelf registration and private placement.

Gilt vs Treasury Bond: How UK and US Government Bonds Compare Gilts are UK government bonds; Treasuries are US bonds. They differ in currency, auction process, yield conventions, and market size. Both are safe and liquid.

Gilt-Edged Market Makers Explained How the Bank of England's GEMM system obligates gilt-edged market makers to provide liquidity, and how they differ from US primary dealers.

Global Bond A single bond issue placed simultaneously in domestic and multiple overseas markets, enabling international investors to buy a fungible security.

Global Bond Offering A single corporate bond issuance simultaneously placed across multiple jurisdictions using one coordinated prospectus and underwriting syndicate.

Government Bond Auction The periodic sale of Treasury bonds and bills by the U.S. government to investors, determining yields and prices.

Government Bond Convexity Explained How convexity causes bond price sensitivity to change with yield moves, and why it benefits long-duration Treasury holders.

Government Bond Duration and Interest Rate Risk Understand modified duration as a measure of price sensitivity for government bonds, with examples of how interest rate moves affect bonds of different maturities.

Government Bonds in a Retirement Portfolio Government bonds provide capital preservation, predictable income, and liability matching in retirement accounts. Duration targeting aligns payoff schedules with spending needs.

Government vs Prime Money Market Fund: Which Is Safer? Compare government and prime money market fund safety, credit risk, and liquidity—why government funds are safer but prime funds didn't break in 2008 or 2020.

Green Bond Debt instruments whose proceeds fund environmentally beneficial projects, subject to disclosure and certification standards.

Green Bond (Corporate) Corporate debt whose proceeds are ring-fenced for environmental projects and verified against recognized sustainability frameworks.

Green Municipal Bonds: Tax-Exempt Financing for Sustainability Projects Green municipal bonds fund climate and infrastructure projects while offering tax-exempt income; certification and yield vary by issuer and project type.

Green Sovereign Bond Government debt whose proceeds fund environmental and climate projects; combines market discipline with green finance.

Guaranteed Bond Bonds where a parent or third party provides full or partial guarantee of principal and interest payments.

High-Yield Bond A high-yield bond is a debt security rated below investment-grade (BB or lower) that offers substantially higher yields to compensate investors for greater default risk.

High-Yield Bond Rating Distribution: BB, B, and CCC Explained Breakdown of high-yield bond rating distribution across BB, B, and CCC tiers, default rates, and how managers use composition to calibrate portfolio risk.

Holding Treasury Bonds to Maturity vs Selling Early Compare holding Treasury bonds to maturity versus selling early: price risk, interest-rate dynamics, opportunity cost, and tax consequences explained.

Holding Treasury Securities in a Brokerage Account Holding Treasury securities in a brokerage account offers liquidity and ease of trading compared to TreasuryDirect, but comes with different settlement and tax-reporting.

Horizon Return Total bond return over a specific holding period, combining coupon income, price appreciation or depreciation, and reinvestment gains.

Horizon Return vs Yield to Maturity: What Changes the Outcome Why a bond's realized return over a holding period differs from YTM: reinvestment rates, sale price changes, and duration effects explained with examples.

Hospital Revenue Bonds Municipal bonds backed by patient revenue streams of healthcare facilities, not tax revenue or general credit.

Housing Revenue Bonds Housing revenue bonds are issued by state housing finance agencies to fund below-market mortgages for low- to moderate-income homebuyers; they carry private-activity restrictions.

How a Bond's Coupon Rate Is Set at Issuance The coupon rate on a new bond is determined by market yields, credit quality, maturity, and demand at the time of issuance through a competitive pricing process.

How a Credit Rating Downgrade Affects Bond Prices How a credit rating downgrade affects bond prices: the mechanics of yield rise, market price decline, and what happens to existing bondholders.

How Accrued Interest Works at Corporate Bond Settlement Understand how accrued interest is calculated at bond settlement using day-count conventions, and why invoice price differs from purchase price.

How Bond Prices Are Calculated Between Coupon Dates Bond prices between coupon payment dates are calculated by adding accrued interest to the clean price, producing the full dirty price paid at settlement.

How Corporate Bond Interest Is Taxed Tax treatment of corporate bond coupon income, original-issue discount accrual, and capital gains versus ordinary income.

How Corporate Bond Prices Move With Interest Rates Corporate bond prices move inversely to interest rates because rising yields reduce the present value of future cash flows. Duration and credit spread amplify or mute the effect.

How Corporate Bonds Are Rated: The Process Explained Learn how corporate bonds are rated by credit agencies in this step-by-step guide to the evaluation process, from application to final opinion.

How Coupon Frequency Affects Bond Duration Why bonds with more frequent coupon payments have shorter duration and lower price sensitivity to interest rate changes than bonds with annual coupons.

How Credit Ratings Affect Bond Yield Spreads Walks through the mechanics of how a credit rating change typically widens or tightens the yield spread an issuer pays over a benchmark.

How Expense Ratios Affect Money Market Fund Yields Money market fund expense ratios directly reduce the net yield investors receive. Learn how fees impact returns in low-rate environments.

How Foreign Central Banks Buy US Treasuries The operational mechanics of how a foreign central bank purchases US Treasury securities, from correspondent banking to Fed custody, and how the TIC system tracks these flows.

How Inflation Affects Bond Prices How inflation affects bond prices through the relationship between interest rates and fixed cash flows. Rising inflation expectations push rates up and existing bond prices down.