Fixed Income Glossary

A

Accrued Interest

Interest that has accumulated on a bond since the last interest payment but has not yet been paid to the bondholder.

Ask Yield to Maturity

The yield an investor would receive if they purchased a bond at the current asking price and held it until maturity, considering all coupon payments and the difference between the purchase price and the face value.

Average Coupon Rate

The weighted average of the coupon rates of bonds in a portfolio, where each bond's coupon rate is weighted by its proportion of the total par value.

Average Price

The mean price at which a bond or a portfolio of bonds has been bought or sold over a specific period.

Average Yield

The mean return earned on a bond or a portfolio of bonds over a specific period, usually expressed as a percentage of the investment.

Average Yield to Worst

The lowest possible annualized yield an investor can receive on a bond, assuming the issuer exercises any call, put, or prepayment options before maturity. It averages the worst-case yields across multiple bonds in a portfolio.

B

Basis Point

A unit of measurement equal to 0.01% (one-hundredth of a percentage point), commonly used to express changes in interest rates and bond yields. For example, a 50 basis point increase means a 0.50% rise in interest rates.

Benchmark Reference

A standard or index against which the performance of a bond, portfolio, or financial product is measured. Common benchmarks include U.S. Treasury yields or corporate bond indices.

Bid

The price a buyer is willing to pay for a bond. It is usually lower than the asking price (the price at which a seller is willing to sell).

Bid Request

Typically the first step in selling a bond. A process in which an investor or institution solicits price quotes from multiple dealers or counterparties for the purchase of a bond or other security. It helps ensure competitive pricing.

Bid Yield to Maturity

The yield an investor would "give up" if they sold a bond at the current bid price.

Blue Sky Laws

State-level securities laws in the U.S. that protect investors from fraud by requiring securities issuers to register their offerings and provide disclosures.

Bond Rating

An assessment of a bond issuer's creditworthiness, indicating the likelihood of timely interest payments and repayment of principal. Webull currently provides ratings assigned by S&P.

Bond Type

This distinguishes bonds by the type of issuer, structure, or features. For example, Webull considers US Treasuries and US Corporate Bonds to be different bond types.

Buy/Sell

The process of purchasing or selling a bond or security in the market. "Buy" refers to acquiring an asset, while "Sell" refers to disposing of it.

C

Call Feature

A provision in a bond that allows the issuer to redeem the bond before its maturity date, typically at a predetermined price and date(s).

Call Protection

A period during which a callable bond cannot be redeemed by the issuer. This protects investors from early repayment and loss of expected interest income.

Call Provision

The specific terms and conditions under which a bond issuer can call (redeem) a bond before maturity, including dates, call price, and notification requirements.

Call Schedule

A list of dates and prices at which a callable bond can be redeemed by the issuer before maturity. It provides transparency on when and at what cost early redemption can occur.

Callable

A bond that can be redeemed by the issuer before its maturity date, usually at a specified call price, allowing the issuer to refinance debt if interest rates decline.

Called Bonds

Bonds that have been redeemed by the issuer before their maturity date under the terms of the call provision. Investors receive the call price instead of waiting for full maturity.

Change of Control Provision (CoC)

A clause that protects bondholders in case the issuing company undergoes a significant ownership change. This provision typically requires the issuer to offer to repurchase the bonds at a predetermined price, most commonly 101% of face value.

Clean Price

The price of a bond excluding any accrued interest; it's the quoted price typically seen in the market.

Conditional Call

A call provision that allows the issuer to redeem a bond early only if specific conditions are met, such as a decline in interest rates or a regulatory event.

Contemporaneous Cost

The current cost or market value of a bond or financial instrument at a given point in time, reflecting prevailing interest rates and credit conditions.

Continuously Callable

A bond that can be redeemed by the issuer at any time after the call protection period ends, rather than only on specific call dates.

Convertible Bond

A type of bond that can be converted into a predetermined number of the issuer's equity shares, providing potential for capital appreciation.

Convexity

A measure of how the duration of a bond changes in response to interest rate movements. Duration measures movements in price, and convexity measures movements in duration. In mathematical terms, convexity is the derivative of duration.

Corporate Bond

A debt security issued by a corporation to raise capital, typically offering higher yields than government bonds due default risk.

Corporate Debt

Money that a company borrows by issuing bonds or taking loans, which it promises to repay with interest.

Coupon

The periodic interest payment made to bondholders during the life of the bond.

Coupon Frequency

How often the bond's interest payments are made, such as monthly, quarterly, semiannually, or annually.

Coupon Rate

The annual interest rate, expressed as a percentage of the bond's face value.

Coupon Type

Coupon type describes how a bond pays interest—fixed, floating, or zero. It affects income predictability and sensitivity to interest rate changes. Fixed stays the same; floating adjusts; zeros pay all at maturity.

Credit Outlook

A credit outlook reflects S&P’s view on the likely direction of a bond’s rating over the next 6 to 24 months—signaling whether an upgrade, downgrade, or no change is more probable.

Credit Quality

An evaluation of a bond issuer's ability to repay interest and principal, influencing the bond's risk and yield.

Credit Risk

The chance that a bond issuer might not make the promised interest payments or repay the principal. Similar to default risk.

Credit Spread

Credit spread is the yield difference between a corporate bond and a risk-free Treasury of the same maturity. It reflects the extra return investors demand for credit risk. Wider spreads mean higher perceived risk.

Credit Watch

A positive or negative credit watch is a signal used by S&P alongside a bond’s long-term rating to highlight a significant likelihood of an upgrade (positive) or downgrade (negative) within the next 90 days.

Creditor

An individual or institution that lends money or extends credit to another party.

Creditworthiness

An evaluation of a borrower's ability to repay debts, often reflected in their credit rating.

Current Yield

Current yield is a bond’s annual interest payment divided by its current market price. It shows the income return, calculated as coupon (cash flow) ÷ price (dollars invested), expressed as a percentage. Similar to the dividend yield on a stock.

CUSIP

A unique nine-character alphanumeric code that identifies a North American financial security, used to facilitate clearing and settlement. The bond equivalent of a ticker symbol.

D

Dated Date

The date from which a bond starts accruing interest, even if it's issued or sold later.

Day Count Basis

The convention used to calculate the amount of accrued interest or the period between two dates, such as "30/360" or "actual/365".

De Minimis Tax Rule

A tax rule that determines whether the discount on a bond is taxed as capital gain or ordinary income, based on the size of the discount relative to the bond's face value and time to maturity.

Debt Refinancing

Replacing an existing debt with a new one, often to take advantage of lower interest rates or better terms.

Dirty Price

The price of a bond including accrued interest.

Default Risk

The possibility that a bond issuer will be unable to make the required interest payments or repay the principal at maturity. Measured by credit ratings from agencies like Moody’s or S&P. High-yield (junk) bonds have higher default risk.

Depth of Book

A display showing all buy and sell orders for a security at different prices, providing insight into market liquidity.

Discount Bond

A bond sold for less than its face (par) value. It may be issued at a discount or trade at a discount in the secondary market.

Domicile

The country where a company or individual is legally registered or permanently resides for taxation and regulatory purposes.

Dummy/Temporary CUSIP

A temporary identifier assigned to a security before its official CUSIP is issued, or while a corporate action is pending.

Duration

Duration estimates how much a bond’s price will change with interest rates. Expressed in years, it reflects the weighted average time to receive all payments, and helps gauge a bond’s interest rate risk.

Duration to Worst

The duration calculated assuming the worst-case scenario, such as the earliest possible call date, for a bond with embedded options.

Duration (Effective)

See Effective Duration.

Duration (Key Rate)

See Key Rate Duration.

Duration (Macaulay)

See Macaulay Duration.

Duration (Modified)

See Modified Duration.

E

Effective Duration

Effective duration estimates how sensitive a bond’s price is to interest rate changes, accounting for features like calls or prepayments. It’s especially useful for bonds where cash flows may change as rates move.

Estimated Annual Income (EAI)

The projected income from an investment over a year, based on current information.

Estimated Yield (EY)

The expected return on an investment, expressed as a percentage of its current price.

Expected Yield

The anticipated return on a bond, considering factors like interest payments, price changes, and reinvestment of interest.

Extraordinary Redemption

The right of an issuer to redeem bonds before maturity due to specific events, such as natural disasters or changes in tax law.

F

Face Value

The amount paid to a bondholder at maturity; also known as par value or principal.

FDIC Insured

Indicates that deposits are protected by the Federal Deposit Insurance Corporation up to the legal limit. See FDIC.gov for more detail.

Federal Deposit Insurance Corporation (FDIC)

A U.S. government agency that insures deposits in banks and thrift institutions, promoting public confidence in the financial system.

Federally Tax Exempt/Taxable

Describes whether the interest income from a bond is exempt from federal income tax.

First Coupon Date

The date on which a bondholder will receive the first interest payment. It may differ from standard coupon periods if the bond is issued between payment dates.

First Settlement Date

The date on which a bond or security transaction is finalized, and ownership transfers from the seller to the buyer.

Foreign Bond

A bond issued in a specific country by a foreign entity and denominated in that country’s currency (e.g., a U.S. company issuing a bond in Japan denominated in yen).

Full Call

The issuer exercises its right to redeem all outstanding bonds in a particular issue before maturity. The bonds are retired, often at par.

G

Global Indicator

A designation used in bond markets to specify whether a security is available for international investors.

Government Bond

A debt security issued by a government to support spending and obligations, generally considered low-risk.

H

High Yield

A bond rated BB+ or lower by S&P, offering higher interest rates to compensate for increased risk; also known as a junk bond.​

Historical Inflation Factor

An adjustment factor used to reflect past inflation rates, often applied to inflation-linked securities like Treasury Inflation-Protected Securities (TIPS).

Horizon Return (Total Return Analysis)

A forward-looking estimate of a bond's total return over a specific investment horizon.

I

Increment

The smallest possible change in the price or quantity of a security, such as a bond's minimum price movement.

Indenture

A formal legal agreement between a bond issuer and bondholders, detailing the terms of the bond, including covenants and obligations.​

Inflation-Linked Bond

A bond that adjusts its principal or interest payments based on inflation rates, protecting investors from inflation's eroding effects.

Interest

The cost of borrowing money, typically expressed as a percentage of the principal. In bonds, it refers to the coupon payments made to investors.

Interest Accrual Date

The date from which interest begins accumulating on a bond, even if payments are made later.

Interest Income

The earnings received from interest payments on investments such as bonds, savings accounts, or loans.

International Bond

A bond issued in a country different from the issuer’s home country, often denominated in a foreign currency.

Investment Grade Bond Bonds rated BBB- or higher by rating agencies, indicating relatively low risk of default.

ISIN (International Securities Identification Number)

A 12-character alphanumeric code used to uniquely identify securities worldwide. Domestic bonds are typically identified by their CUSIP, while foreign bonds are typically identified by their ISIN.

Issue Date

The date when a bond or other security is first made available for sale and begins accruing interest.

Issue Price

The price at which a bond is originally sold by the issuer, which may be at a discount, premium, or at par.

Issuer

The entity that issues a bond, borrowing funds from investors with the obligation to repay principal and interest.​

Issuer Events

Significant events related to a bond issuer, such as credit rating changes, mergers, bankruptcies, or regulatory actions.

J

Junk Bond

Synonymous with a "High Yield" bond, which has a credit rating of BB+ or lower, indicating higher risk of default compared to investment grade bonds.

L

Last Coupon

The final interest payment made on a bond before it matures or is called.

M

Macaulay Duration

Duration metric that measures the weighted average time it takes to receive all the bond's cash flows.

Make Whole Call (MWC)

A bond provision allowing the issuer to redeem the bond early by paying a premium that ensures investors receive the equivalent of the bond’s expected interest payments.

Marginable Security

A security that can be purchased using margin (borrowed money), as permitted by brokerage firms and regulators.

Mark-Down

A reduction in the price of a security when an investor sells a bond back to the market, representing the dealer’s profit margin.

Market Fluctuation

The natural rise and fall of security prices due to changes in supply, demand, economic conditions, or investor sentiment.

Mark-Up

An increase in the price of a security when a dealer sells it to an investor, representing the dealer’s profit.

Material Events

Significant developments affecting a bond or its issuer, such as defaults, downgrades, regulatory actions, or legal disputes, which may impact bond prices or investor decisions.

Maturity Date

The date on which a bond's principal is repaid to investors, ending the bond's term.

Maximum Rate

The highest possible interest rate a bond or security can pay, often set for floating-rate securities.

Minimum Rate

The lowest possible interest rate a bond or security can pay, typically used in adjustable-rate securities.

Modified Duration

Duration metric that measures how much a bond's price will change for a 1% change in interst rates. This is the type of duration displayed on Webull's search results, and although it is used to measure % change in price, it is still expressed in years.

Municipal Bond

A bond issued by state or local governments to fund public projects, often offering tax-exempt interest income.

N

Next Coupon Date

The upcoming date when a bondholder will receive the next interest payment.

Next Reset Rate

The new interest rate that will apply to a floating-rate bond or security at the next reset date.

O

Offer Price

The price at which a seller is willing to sell a bond or security.

Open Order

A buy or sell order that remains active until it is executed or canceled.

Option Adjusted Spread (OAS)

The yield spread of a bond over a benchmark interest rate, adjusted for optionality.

Original Issue Amount

The total value of a bond or security issued at the time of its original sale.

Original Issue Discount (OID)

A bond issued at a price lower than its face value, with the difference treated as taxable income over time.

Outlier Bid

A bid price significantly higher or lower than typical market prices, often considered an anomaly.

Over The Counter (OTC)

How bonds are traded. A decentralized marketplace where securities are traded directly between parties without being listed on a formal exchange.

P

Par Value

The face value of a bond, typically $1,000, repaid to the bondholder at maturity.

Partial Call

A provision allowing the issuer to redeem a portion of the bond issue prior to maturity, often according to a schedule or pro-rata basis.

Pay Frequency

How often interest payments are made on a bond (e.g., monthly, quarterly, annually).

Phantom Income

Taxable income that an investor must report even though they have not received cash payments, such as accrued interest on zero-coupon bonds like Treasury STRIPs.

Poison Put

A type of change of control provision that is designed as an anti-takeover measure.

Premium Bond

A bond trading above its face value, often due to its coupon rate being higher than current market rates.​

Pre-Refunded Bonds

Bonds refinanced before maturity by setting aside funds in escrow for their repayment.

Pre-Refunded Price

The price at which a pre-refunded bond is repaid before its original maturity date.

Prevailing Market Price (PMP)

The current market price of a security based on recent trades.

Price (ask)

The lowest price at which a seller is willing to sell a security.

Price (bid)

The highest price a buyer is willing to pay for a security.

Pricing date

The date on which a bond's price is determined before issuance.

Primary Country

The country where a company primarily conducts business, issues securities, or is incorporated.

Principal

The original sum of money invested or lent, which is repaid at maturity, excluding interest.

Principal Repayment

The return of the original bond investment to the bondholder at maturity.

Provision

A clause in a bond agreement specifying terms, such as call features or redemption rules.

Pull-to-Par Effect

The natural movement of a bond's price towards par as it approaches maturity. The closer it gets to the maturity date, the less volatile the price becomes due to the fact that it will mature at par (assuming no default).

Puttable bond

A bond that allows the holder to sell it back to the issuer before maturity at a predetermined price, providing flexibility to investors.

Q

Quantity

The number of units or shares of a security being bought or sold. In bonds, the quantity indicates the face/par value.

R

Recent Trades

A record of the most recent transactions of a security.

Recovery Rate The percent of the original principal that is returned to bondholders through liquidation or restructing after a default.

Redemption

The repayment of a bond’s principal amount to the bondholder at or before maturity.

Redemption Price

The price paid to a bondholder when the bond is redeemed before maturity.

Regulatory Call Provision

A corporate action event triggered by legal or regulatory changes, such as a new law, rule, or government mandate. This may affect bond terms or issuer obligations, and could result in an early redemption.

Reset Frequency

The interval at which the interest rate on a floating-rate bond is adjusted.

Risk-Free Rate

The theoretical return on an investment with zero risk, often represented by U.S. Treasury securities.

S

S&P Rating

A credit rating assigned by Standard & Poor’s assessing a bond issuer's creditworthiness.

Secondary Market

The market where securities are bought and sold after their initial issuance.

Sector

A classification for bonds or stocks based on the industry or type of issuer (e.g., Industrials, Financials).

Secured Bond

A bond backed by specific collateral, reducing the risk of default.

Secured Overnight Financing Rate (SOFR)

A benchmark interest rate for overnight borrowing in the U.S. repo market.

SEDOL

A unique code used to identify securities in the UK and international markets.

Senior Bond

A bond that has a higher claim on a company’s assets and earnings than subordinated (junior) debt in the event of liquidation.

Sinking Fund

A bond indenture that requires the bond issuer to redeem some portion of the outstanding bonds periodically prior to final maturity, according to a set schedule. This helps reduce the debt load over time.

Sovereign Debt

Bonds issued by a national government in its own or a foreign currency.

Special Call Provision

A non-recurring corporate event that impacts securities, such as a merger, restructuring, or extraordinary dividend. This may affect bondholder rights or pricing, and could result in an early redemption

Special Mandatory Redemption

A bond provision requiring early redemption if certain conditions are met.

Special Optional Redemption

A provision allowing the issuer to redeem a bond early under specific circumstances.

Spread

The difference between the yields of two bonds, often used to measure credit risk or market conditions.

Standard & Poor's (S&P) Corporation

A financial services company known for credit ratings and market indices.

Standard Market Session

The normal trading hours of an exchange. Webull's fixed income market session is 7:30am - 5:00pm.

Subordinated Bond

A bond with a lower priority claim on assets in case of default, making it riskier than senior bonds.

Survivor Option

A feature allowing a bondholder’s heirs to redeem a bond at par value upon the holder’s death.

T

Taxable Equivalent Yield

The yield an investor in a tax-exempt bond would need to earn on a taxable bond to equal the after-tax return. Taxable Yield * (1 - Tax Rate )= Tax Free Yield. For example, a 4% taxable bond is equivalent to a 3% tax free bond at a 25% tax rate.

Tax-exempt Income

Interest income that is not subject to federal income tax, and sometimes state/local taxes.

Tender Offer

A voluntary, issuer-initiated offer to repurchase bonds at a specified price, often above market value.

Term

The length of time until a bond matures.

Third-Party Price

A bond price provided by an independent pricing service.

Third-Party Providers

External entities that provide data, pricing, or services related to securities.

TRACE

TRACE is a system operated by FINRA (the Financial Industry Regulatory Authority) that collects and publishes real-time trade data for most U.S. corporate bond transactions.

TRACE Eligibility

Indicates whether a bond transaction must be reported to FINRA’s TRACE system.

Treasuries

U.S. government securities, including bills, notes, and bonds.

Treasury Auctions

The process by which the U.S. Treasury sells new government securities to investors.

Treasury Benchmark

A U.S. Treasury security used as a reference point for pricing other bonds.

Treasury Bill (T-Bill)

A short-term U.S. government debt instrument with maturities of one year or less.

Treasury Bond (T-Bond)

A long-term debt security issued by the U.S. government with maturities of 10 years or more.

Treasury Inflation Protected Securities (TIPS)

U.S. government bonds designed to protect investors from inflation by adjusting the principal based on the Consumer Price Index (CPI).

Treasury Note (T-Note)

A U.S. government debt security with a maturity between 2 and 10 years.

Treasury STRIPs

Treasury STRIPs are zero-coupon security created by separating the principal and interest payments of U.S. Treasury bonds. They allow investors to buy each component individually but tend to be less liquid and subject to phantom income.

U

Unsecured Bond

A bond that is not backed by collateral but rather by the creditworthiness of the issuer, also called a debenture.

Use of Proceeds

The intended purpose for the funds raised from a bond/debt issuance.

W

Workout Date

The estimated date on which a bond restructuring or refinancing is expected to be completed.

Y

Yield

The return an investor receives on a bond, typically expressed as an annualized percentage.

Yield Curves

A graphical representation of bond yields across different maturities, used to gauge economic expectations.

Yield to Call (YTC)

The yield an investor earns if a callable bond is redeemed by the issuer before its maturity date.

Yield to Maturity (YTM)

Represents the total return you’d earn if you hold the bond to maturity, including all coupon payments and the difference between purchase price and par, expressed as an annual rate.

Yield to Sink (YTS)

The yield on a bond assuming it is retired early through a sinking fund.

Yield to Worst (YTW)

The lowest possible yield an investor could receive if a bond is called or matures early.

Z

Zero-Coupon Bond

A bond that does not make periodic interest payments but is sold at a discount and pays its full face value at maturity.