Bond Points: A conventional unit of measure for bond prices set at $1 and equivalent to 1% of the $100 face value of the bond. A price of 80 means that the bond is selling at 80% of its face or par value.

 

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Bond Points: A conventional unit of measure for bond prices set at $1 and equivalent to 1% of the $100 face value of the bond. A price of 80 means that the bond is selling at 80% of its face or par value.

Par Bond: A bond trading at its face value.

Passive Bond: A bond without any interest yield.

Payment-In-Kind (PIK) Bond: A bond that gives the issuer an option (during an initial period) either to make coupon payments in cash or in the form of additional bonds.

Performance Bond: A surety bond between two parties, insuring one party against loss if the terms of a contract are not fulfilled.

Peptide Bond: A covalent bond that links two amino acids together to form a polypeptide chain. A covalent bond between the amine end of one amino acid and the acid end of another amino acid.

PAC Bond: Stands for Planned Amortization Class bond. A tranche class offered by some CMOs that has a sinking fund schedule and an ability to make principal payments that are not subordinated to other classes.

Optional Payment Bond: A bond whose principal and/or interest may be paid in foreign or domestic currency at the discretion of the bondholder.

Municipal Bonds: Bonds issued to finance public improvements such as parks, schools and urban renewal projects.

Municipal Bond Insurance: An insurance policy that guarantees payment on municipal bonds in the event the issuer defaults.