Fixed income

Money Market Funds as an Emergency Fund Whether a money market fund is appropriate for emergency savings, weighing liquidity, FDIC coverage limits, and trade-offs with high-yield savings accounts.

Money Market Mutual Fund A fund investing in short-term, low-risk instruments for stable principal and modest returns.

Money Market Yield A 360-day annual rate used to express short-term debt returns on a standardized, comparable basis.

Money-Market Account vs Money-Market Fund: Key Differences A money-market account is a bank deposit with FDIC insurance and variable interest rates; a money-market fund is an SEC-registered mutual fund holding short-term debt with no insurance.

Money-Market Fund Liquidity Fees and Redemption Gates How money market fund liquidity fees and redemption gates work during liquidity stress events and when regulators allow their use.

Moody's Downgrade A downgrade of a company or sovereign's credit rating by Moody's Investors Service, signaling increased default risk.

Moral Obligation Bond A municipal bond backed by a non-binding legislative pledge to cover debt-service shortfalls, blending revenue-bond mechanics with political reputation.

Mortgage Servicing Rights Explained Mortgage Servicing Rights: how banks create an asset by selling loans but retaining servicing duties, and how MSR value swings with prepayment risk.

Mortgage-Backed Security (MBS) A mortgage-backed security is a debt security collateralized by a pool of residential mortgages. Investors receive cash flows from mortgage payments, reducing credit risk through diversification.

MSRB EMMA: How Municipal Bond Disclosure Works Guide to the Electronic Municipal Market Access portal—MSRB EMMA—and how to access trade data, official statements, and disclosures.

Muni Bond Fund vs Individual Municipal Bonds Compare owning municipal bonds through a fund versus buying individual bonds. Weigh liquidity and diversification against maturity certainty and expense ratios.

Muni Bond Rating Methodology Credit assessment criteria specific to municipal issuers, emphasizing revenue stability and governance.

Municipal Bond A municipal bond is a debt security issued by a state, local government, or agency to fund public infrastructure projects. Interest income is typically exempt from federal income tax.

Municipal Bond Credit Ratings: How They Work Explore how municipal bonds are rated, focusing on unique factors like tax base stability, pension obligations, and revenue pledges in muni credit analysis.

Municipal Bond Default Rate vs Corporate Bonds Municipal bond default rates remain structurally lower than corporate bonds, though defaults are rising. Understand the tax-backed advantage and exceptions.

Municipal Bond Insurance Third-party guarantee that protects investors against default on principal and interest payments from municipal bonds.

Municipal Bond Ladder Strategy A municipal bond ladder distributes maturities across years to manage reinvestment risk and create predictable, tax-exempt cash flows.

Municipal Bond Markup Disclosure: What Dealers Must Tell You FINRA and MSRB rules requiring municipal bond dealers to disclose markups and markdowns on same-day trades; how to interpret dealer spreads.

Municipal Bond Ordinary Income vs Capital Gain Tax Treatment How muni bond sales are taxed: interest income is usually tax-exempt, but capital gains and losses follow standard rules; market-discount and premium bonds have special treatment.

Municipal Bond Secondary Market Liquidity Why the municipal bond secondary market is less liquid than Treasuries, how dealer mark-ups affect retail pricing, and strategies for efficient trading.

Municipal Bond Tax Advantage Federal income tax exemption on interest from bonds issued by states, cities, and local authorities; a subsidy that benefits higher-income investors most.

Municipal Bonds and the Medicare Net Investment Income Surtax Learn whether municipal bond interest is subject to the 3.8% net investment income surtax despite being federal income-tax-exempt.

Municipal Bonds for High-Income Earners Why municipal bonds for high-income earners deliver stronger after-tax yields. Learn the break-even calculation that shows when tax-exemption beats taxable alternatives.

Municipal Bonds for Investors in Lower Tax Brackets Shows the break-even tax rate for municipal bonds using tax-equivalent yield math, and when taxable bonds or other investments beat munis for low-income savers.

Municipal Bonds in a Roth IRA: Does the Tax Exemption Still Make Sense? Why holding tax-exempt municipal bonds in a Roth IRA typically wastes the tax benefit and which accounts are optimal for muni exposure.

Negative Bond Yield Explained How do negative bond yields work? Learn why investors accept guaranteed losses, the mechanics, and what conditions produce them.

Negative Convexity When bond prices gain less from falling interest rates due to embedded call options, creating asymmetric price behavior.

Negative Convexity in Callable Bonds Explained Callable bonds exhibit negative convexity because an embedded call option caps price appreciation when yields fall, creating asymmetric price-yield behavior.

Negative Convexity in Mortgage-Backed Securities Why mortgage-backed securities exhibit negative convexity as rates fall due to prepayment acceleration, creating asymmetric price behavior.

Negative Credit Watch vs Negative Outlook: Key Differences Understand the difference between negative credit watch and negative outlook—one signals imminent risk, the other longer-term pressure. Learn what each means for bond prices.

Negative Pledge Covenant A bond indenture clause preventing the issuer from pledging assets as collateral to new lenders without equally securing existing bondholders.

Negative-Yielding Government Bond A sovereign bond offering negative returns; investors accept guaranteed losses as a hedge against deeper financial distress.

Negotiated vs Competitive Sale How municipal bonds are brought to market through either negotiated underwriter selection or open competitive bidding, each with distinct cost and pricing implications.

Nelson-Siegel Model A three-factor parsimonious model that fits the entire yield curve using level, slope, and curvature, widely used by central banks and traders to smooth and forecast interest rates.

New Issue Concession in Corporate Bond Offerings The price discount underwriters grant to institutional buyers at corporate bond launch, and how it affects secondary-market trading on day one.

Nominal Spread The yield difference between a corporate bond and a Treasury of the same maturity, expressed in basis points.

Notching The rules-based adjustment by which rating agencies move specific debt instruments above or below an issuer's anchor rating.

Nth-to-Default Swap A credit derivative that pays out when the n-th entity in a reference basket defaults, concentrating default risk in a way that depends on correlation.

Odd-Lot Penalty in Corporate Bond Trading Why retail investors buying fewer than 100 bonds pay wider spreads and higher costs than institutional buyers, and how to minimize the penalty.

Odd-Lot Pricing Penalty in Municipal Bonds Retail investors buying fewer than five municipal bonds (under $25,000 face value) typically pay 1–3% more than institutional buyers in round-lot trades, a hidden cost of small position sizes.

Official Statement The primary disclosure document for a municipal bond offering, containing financial, operational, and legal information required to help investors evaluate the issuer's credit quality and repayment ability.

OIS Curve The overnight-indexed swap curve, which reflects near-risk-free rate expectations and is the foundation of modern fixed-income valuation.

On-the-Run versus Off-the-Run Treasuries Why the most recently issued U.S. Treasury bonds command a price premium over older bonds of identical maturity, reflecting superior liquidity.

On-the-Run vs Off-the-Run Treasury Spread The on-the-run/off-the-run Treasury spread is the yield premium for older bonds versus freshly issued Treasuries of the same maturity, driven by liquidity.

Option-Adjusted Spread (OAS) Option-adjusted spread is the credit spread of a bond adjusted to exclude the value of embedded options like call or conversion features.

Original Issue Discount Bond A bond issued at a price below par value where the discount accretes as taxable interest income, without regular cash coupon payments.

Original Issue Discount on Municipal Bonds How OID on municipal bonds accretes tax-free, how it changes when buying in the secondary market, and tax implications.

Overcollateralization The practice of backing securitized bonds with a collateral pool whose value exceeds the bond's face amount, creating a cushion that absorbs potential losses before investors suffer.

Overcollateralization Test Coverage ratio in CLOs and CDOs that, when breached, redirects cash from junior tranches to repay senior notes faster.

Overnight Repo Rate vs Fed Funds Rate: Key Differences Overnight repo rate vs fed funds rate: mechanics, collateral, and spread relationship between these two core short-term rates.

Par Call vs. Make-Whole Call: Key Differences Understand par call vs make-whole call on corporate bonds. Par calls are fixed-price redemptions; make-whole calls reimburse the bondholder for spread loss. Each shifts when refinancing is economical.

Par Value Par value is the face value of a bond — the amount the issuer promises to repay at maturity. It is the principal on which coupon payments are calculated.

Par Value The principal amount of a bond, typically $1,000 per bond, that the issuer promises to repay at maturity.

Par Value vs Market Value of a Bond Understand how par value (face amount) differs from market value (current trading price). Bond prices fluctuate based on interest rates and credit risk.

Par Yield Curve Curve showing the coupon rates of bonds trading at par value by maturity, directly revealing market yield expectations without adjustment.

Par Yield vs Spot Rate: What Each Tells You About the Yield Curve Par yield is the coupon rate that prices a bond at par; spot rate is the zero-coupon discount rate. Each derives from market prices but answer different valuation questions.

Parallel Shift in the Yield Curve A parallel shift yield curve moves all interest rates across maturities by roughly the same amount, impacting bond portfolios based on duration.

Paris Club Debt Restructuring The informal multilateral framework through which official bilateral creditors coordinate the renegotiation of sovereign debt obligations.

Pass-Through Security A securitized bond structured to pass cash flows (principal and interest) directly from underlying borrowers through to investors, proportionally and without recourse.

Pay-in-Kind Bond Debt instruments that pay interest in additional bonds rather than cash, deferring cash outflow for highly leveraged issuers.