A bond with an above-market yield and low price volatility. In this case, the terms and conditions of the bond usually include the right of early termination. The issuer will exercise this right if the market interest rate falls below the coupon for a longer period (a callable bond with coupons that are above predominant interest rates. A cushion bond is more expensive than other bonds. If interest rates rise, the value of a cushion bond depreciates less than other bonds since its interest rate was already high compared to others. However, if interest rates fall, the issuer may call the bond. This results in a higher prepayment risk). – See bond, callable, novation.

Attention: The financial encyclopedia is protected by copyright and may only be used for private purposes without express consent!
University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
E-mail address: info@ekrah.com
https://de.wikipedia.org/wiki/Gerhard_Ernst_Merk
https://www.jung-stilling-gesellschaft.de/merk/
https://www.gerhardmerk.de/

Kommentare geschlossen.