Unsecured short-term fixed income instrument that is issued either by a corporation, city, state or country, that has a high probability of defaulting on their promissory notes. Since bad paper is not backed by collateral, it is sold at a discount to the equivalent collateral-backed fixed-income securities. However, in contrast to regular commercial paper which typically has a strong rating from a credit agency, bad paper does not possess this quality. |||Bad paper is risky. Not only is it not backed by collateral, it is also issued by an entity that could potentially fail to meets its obligations. Bad-paper investors take on high levels of risk and, as a result, would be offered an attractive interest rate as proper compensation.
A zero-coupon bond issued by certain states to assist families save for college tuition by means of added tax benefits. |||These bonds are typically issued in small denominations and are offered in several maturities, making them more convenient for investing and paying yearly college tuition fees. In some states, additional benefits like tuition discounts may be included.
Bonds rated Ba3/BB- are generally considered speculative in nature and are not considered to be investment-grade bonds suited for people wishing to avoid the risk of losing their principal. These bonds are commonly referred to as junk bonds, though this rating indicates that they are towards the more stable end of the junk-bond rating spectrum. Ba3 is a long-term bond rating provided by the Moody's rating service, while BB- is the parallel rating provided by both the S&P and Fitch rating services. Ba2/BB is the rating that falls directly above Ba3/BB-, while B1/B+ falls directly below. |||Bonds rated Ba3/BB- provide a yield-to-maturity or yield-to-call rate that is well above bonds with higher ratings, especially those issued by the U.S. government, municipalities and the largest global corporations. However, it is important for investors to realize that this higher rate serves as compensation for investing money in a company or government that may not be financially sound and may result in the loss of one's investment.
The interest a person or trader shows in buying or selling a bond. A trader may have specific interest in a certain type of bond based on his or her existing positions. |||In a bond market, trader axes are matched up in order to execute a transaction.
1. A representative measure of a range of prices that is calculated by taking the sum of the values and dividing it by the number of prices being examined. The average price reduces the range into a single value, which can then be compared to any point to determine if the value is higher or lower than what would be expected.2. A bond's average price is calculated by adding its face value to the price paid for it and dividing the sum by two. The average price is sometimes used in determining a bond's yield to maturity where the average price replaces the purchase price in the yield to maturity calculation. |||1. In situations where there is a range of prices it can be useful to calculate the average price to simplify a range of numbers into a single value. For example, if over a four-month period you paid $104, $105, $110, and $115 for your utilities, the average price or cost of your monthly utilities would be $108.50. 2. Although the average price of a bond is not the most accurate method to find its YTM, it does give investors a rough and simple gauge to find out what a bond is worth.
1. Technology that is considered environmentally friendly based on its production process or supply chain. 2. A means of energy production that is less harmful to the environment than more traditional ways of generating energy, such as burning fossil fuels. Green technology is a relatively young marketplace but investor interest runs very high in response to global warming fears and the increasing scarcity of many natural resources. Taobiz explains Green Tech Green tech may be a stated goal of a business segment within a large company, or the focused mission statement of a smaller startup firm. It can cover anything from recycled product packaging to longer-lasting light bulbs and alternative energy production. Specialized investment funds known as "green funds" seek out publicly traded leaders in the green tech movement for their investment dollars. In addition, many socially conscious investors may choose to only invest in companies that are environmentally friendly or have pledged to become so.
An estimate of the number of terms to maturity, taking the possibility of early payments into account. Average life is calculated using the weighted average time to the receipt of all future cash flows. |||This is often used in sinking funds.
Investment activities that focus on companies or projects that are committed to the conservation of natural resources, the production and discovery of alternative energy sources, the implementation of clean air and water projects, and/or other environmentally conscious business practices. Pure play green investments are those that derive all or most of their revenues and profits from green activities. Green investments can also be made in companies that have other lines of business but are focusing on green-based initiatives or product lines. Taobiz explains Green Investing Green investing can be accomplished through individual securities or through pooled investment vehicles such as mutual funds or exchange-traded funds. This style of investing is an offshoot of socially conscious investing, but neither type of investing implies investments that are safer than a market index such as the S&P 500. In fact, investing in "green" companies can be riskier than other equity strategies, as many companies in this arena are in the development stage, with low revenues and high earnings valuations.