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About Corporate Bonds

Corporate Guides Glossary

Collateral

Assets pledged by a borrower to secure repayment of a loan or bond.

Coupon

A bond’s stated interest rate.

Default

A borrower’s failure to make timely payments of interest and principal when due or to meet other requirements related to the bonds, such as maintenance of collateral or financial covenants.

Face value

The value that appears on the front, or face, of a bond, which represents the amount the issuer promises to repay at maturity. Also known as par or principal amount.

Interest

Compensation paid or to be paid for the use of money, generally expressed as an annual percentage rate. The rate may be constant over the life of the bond (fixed-rate), or may change from time to time by reference to an index (floating-rate).

Liquidity

Capacity of a market to absorb a reasonable level of selling without significant losses.

Maturity

The date when the principal amount of a bond becomes due and payable.

Security

Collateral pledged by a bond issuer (debtor) to an investor (lender) to secure repayment of the loan.

Volatility

The propensity of a security’s price to rise or fall sharply.

 

All information and opinions contained in this publication were produced by the Securities Industry and Financial Markets Association from our membership and other sources believed by the Association to be accurate and reliable. By providing this general information, the Securities Industry and Financial Markets Association makes neither a recommendation as to the appropriateness of investing in fixed-income securities nor is it providing any specific investment advice for any particular investor. Due to rapidly changing market conditions and the complexity of investment decisions, supplemental information and sources may be required to make informed investment decisions.