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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.
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