Glossary
This glossary is intended as a reference for commonly used investment terms but does not contain all relevant terms nor all possible definitions of any individual term. You may wish to contact your investment professional for additional information. The information set forth was obtained from sources believed to be reliable, but we do not guarantee its accuracy or completeness.
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A
- Advisor
- Advisory Fee
- Alpha
- Alternative Minimum Tax (AMT)
- American Stock Exchange (AMEX)
- Annualized Dividend Per Share
- Asset Class
- Assets Under Management
- Average Cost
- Average Daily Trading Volume
- Average Effective Maturity
- Average Nominal Maturity
- Average Weighted Maturity
B
C
- CUSIP
- Calendar Year
- Call Protection
- Callable Bond
- Capital Appreciation
- Capital Gain
- Capital Gains Distribution
- Capital Gains Tax
- Capital Loss
- Captive (finance) Agent
- Closed Fund
- Closed-End Fund
- Closing NAV
- Closing Price
- Commission
- Common Stock
- Contingent Deferred Sales Charge (CDSC)
- Controlled Duration
- Corporate Bond
- Coupon
- Credit Risk
D
- Declaration Date
- Defined Benefit Plan
- Defined Contribution Plan
- Designated Beneficiary
- Discount
- Diversification
- Dividend Per Share
- Dividend Reinvestment Plan (DRIP)
- Dividend Yield
- Duration
E
- Earnings per Share Growth Projection (FY1)
- Earnings per Share Growth Projection (FY2)
- Effective Duration
- Effective Rate
- Equity Fund
- Expense Ratio
F
G
- General Obligation (GO) Bond
- Generally Accepted Accounting Principles (GAAP)
- Government National Mortgage Association (GNMA or Ginnie Mae)
- Green Shoe
H
I
- Illiquid Securities (also see Liquidity Risk)
- Inception Date (Start Date)
- Independent Agent
- Index
- Individual Retirement Account (IRA)
- Initial Net Asset Value
- Initial Public Offering (IPO)
- Interest Rate Risk
- Investment Company Act of 1940
- Investment Objective
- Investment Philosophy
- Investment-Grade
- Issue
L
M
- Management Fee
- Market Capitalization
- Modified Duration
- Money Market
- Morningstar Rating System
- Mortgage Bond
- Municipal Bond
- Mutual Fund
N
O
P
- P/E Ratio
- Par Value
- Payment Date
- Perpetual Closed-End Fund
- Portfolio
- Portfolio Turnover
- Preferred Stock
- Premium
- Prepayment Risk
- Price Change
- Price/Book (P/B) Ratio
- Prospectus
- Proxy
- Proxy Statement
- Purchasing Power Risk
R
S
- S&P 500 Index
- Securities and Exchange Commission (SEC)
- Settlement Date
- Standard Deviation
- Suitability
- Syndicate
T
- Tax-Exempt Bond
- Tax-Free Bond Fund
- Taxable Income
- Taxable-Equivalent Yield
- Term Trust
- Ticker
- Total Return
- Trade Date
- Trading Volume
- Transfer Agent
- Treasury Bills (T-bills)
U
V
W
Y
Z
Glossary Definitions
12-b
A fee charged by some mutual funds to cover promotion, distribution and marketing expenses.
401 (k) Plan
A retirement savings plan offered by a corporation to its employees, which allows employees to set aside tax-deferred income for retirement purposes. The name 401(k) comes from the IRS section describing the program.
403 (b) Plan
A retirement savings plan similar to a 401(k) plan, but one, which is offered by non-profit organizations, such as universities and some charitable organizations, rather than corporations.
52-Week High
The highest price a security reached during the last 52 weeks.
52-Week Low
The lowest price a security reached during the last 52 weeks.
529 Plan
A state-sponsored college savings program designed to help parents finance education expenses. Section 529 plans are administered by investment companies and subject to contribution requirements and investment guidelines. Withdrawals from the account are taxed at the child's tax rate.
Advisor
A person or organization employed by an individual or mutual fund to manage assets or provide investment advice. Also called financial advisor or investment advisor or investment counsel. Sometimes spelled "adviser".
Advisory Fee
A charge paid to a mutual fund's managers for their services; usually includes fund administration costs and investor relations. Typically a certain percentage of assets under management.
Alpha
A measure risk-adjusted performance. A higher alpha indicates a security has performed better than expected with its given beta (or volatility.) See Beta.
Alternative Minimum Tax (AMT)
A tax regulation created to ensure that high-income individuals, corporations, trusts, and estates pay at least some minimum amount of tax, regardless of deductions, credits or exemptions. It operates by adding certain tax-preference items back into adjustable coupons.
American Stock Exchange (AMEX)
A stock exchange in New York City. Issuers of stocks and bonds traded on the AMEX tend to be smaller than companies whose securities trade on the New York Stock Exchange. Some index options and interest rate options trading also occurs on the AMEX.
Annualized Dividend Per Share
The income paid by a security or fund expressed as an annualized amount.
Asset Class
Category of different investment types, such as stocks, bonds, real estate, cash, etc.
Assets Under Management
The total value of assets that an investment company, mutual fund, hedge fund, portfolio manager, or other manages and administers for itself and its customers.
Average Cost
Average cost of position (per share at time of purchase).
Average Daily Trading Volume
Daily trading volume averaged over a specified time period.
Average Effective Maturity
A weighted average of the maturities of the bonds in a portfolio, taking into account all mortgage prepayments, puts, and adjustable coupons.
Average Nominal Maturity
A measure of a bond's maturity, which unlike average effective maturity, does not take into account mortgage prepayments, puts, or adjustable coupons.
Average Weighted Maturity
The length of time until the average security in a fund will mature or be redeemed by its issuer. It indicates a fixed income fund's sensitivity to interest rate changes. Longer average weighted maturity implies greater volatility in response to interest rate changes.
Back-End Sales Load
A sales charge or commission paid when an individual sells an investment, such as a mutual fund or an annuity. (Typically declines over time.) Also called redemption fee or deferred sales charge.
Basis Point
One-hundredth of a percentage point (0.01 percentage points).
Benchmark
A standard used for comparison.
Beneficiary
A beneficiary is an individual named by a retirement account holder to receive account proceeds after the death of the account holder or who has that status under the accounts default provisions.
Beta
Measures a fund's sensitivity to market movements by comparing a fund's excess return (over a benchmark) to the market's excess return. By definition, the beta of the market is 1.00. For example, a beta that is lower than 1.00 would normally indicate that a fund's excess return is expected to be above the market's excess return in a down year and below in an up year. However, beta is a measure of historical volatility and cannot predict a fund's actual performance.
Bond
A debt instrument issued for a period of more than one year with the purpose of raising capital by borrowing. The federal government, states, cities, corporations, and many other types of institutions sell bonds. A bond is generally a promise to repay the principal along with interest on a specified date (maturity).
Bond Fund
A mutual fund that invests in bonds, typically with the objective of providing stable income with minimal capital risk.
Bond Insurance
Insurance policy underwritten by a private insurance company that guarantees payment of income and dividend in the event of default.
Breakpoint
The level of dollar investment in a mutual fund at which an investor becomes eligible for a discounted fee. This level may be achieved through a single purchase or a series of smaller purchases.
CUSIP
Unique eight-digit security identifiers with an additional check digit, which identifies the security. For most securities, the identifier is the actual CUSIP assigned by the Committee of Uniform Security Identification Procedures.
Calendar Year
A year that ends on December 31.
Call Protection
Characteristic of some callable bonds in which the bonds may not be called for a specified initial period, usually two to three years.
Callable Bond
A bond that the issuer has the right to redeem prior to its maturity date, under certain conditions. Also called redeemable bond. Opposite of irredeemable bond.
Capital Appreciation
An increase in the market price of an asset.
Capital Gain
The amount by which an asset's selling price exceeds its initial purchase price. A realized capital gain is an investment that has been sold at a profit. An unrealized capital gain is an investment that hasn't been sold yet but would result in a profit if sold. Capital gain is often used to mean realized capital gain. Opposite of capital loss.
Capital Gains Distribution
A payment to investment company shareholders of profits realized on the sale of its securities. Equity funds usually pay out these amounts once a year, typically in December, while bond funds often include capital gains in their monthly distributions. Many funds allow automatic reinvestment of capital gains, instead of distribution.
Capital Gains Tax
A tax assessed on profits realized from the sale of a capital asset, such as stock.
Capital Loss
The decrease in the value of an investment or asset. Opposite of capital gain.
Captive (finance) Agent
An insurance agent working exclusively for a single company, as opposed to an independent agent.
Closed Fund
An open-end mutual fund that has temporarily or permanently suspended sale of shares to new customers, usually due to rapid asset growth. Outstanding shares are still accepted for redemption by the fund.
Closed-End Fund
A fund with a fixed number of shares outstanding, and one that does not redeem shares the way a typical mutual fund does. Closed-end funds behave more like stock than open-end funds: closed-end funds issue a fixed number of shares to the public in an initial public offering, after which time shares in the fund are bought and sold on a stock exchange, and they are not obligated to issue new shares or redeem outstanding shares as open-end funds are. The price of a share in a closed-end fund is determined by market demand, so shares can either trade below their net asset value (at a discount) or above it (at a premium). Also called closed-end investment company or publicly traded fund.
Closing NAV
The dollar value of a single mutual fund share, based on the value of the underlying assets of the fund minus its liabilities, divided by the number of shares outstanding.
Closing Price
Closing price of a security.
Commission
A fee charged by a broker or agent for his/her services in facilitating a transaction, such as the buying or selling of securities or real estate.
Common Stock
Securities representing equity ownership in a corporation, providing voting rights, and entitling the holder to a share of the company's success through dividends and/or capital appreciation. In the event of liquidation, common stock holders have rights to a company's assets only after bondholders, other debt holders, and preferred stock holders have been satisfied.
Contingent Deferred Sales Charge (CDSC)
A back-end load charged only in certain circumstances.
Controlled Duration
Maintaining a portfolio's interest rate exposure (duration) within a narrow band to that of its benchmark.
Corporate Bond
A bond issued by a corporation. Such bonds usually have: a par value of $1,000, taxable interest payments and term maturity.
Coupon
The interest rate on a fixed income security, determined upon issuance, and expressed as a percentage of pars. Also referred to as the term for each interest payment made to the bondholder.
Credit Risk
Risk that the issuer of a fixed income instrument will not meet its payment obligations.
Declaration Date
The date on which a company's directors meet to announce the date and amount of the next dividend payment. Once the payment has been authorized, it is called a declared dividend.
Defined Benefit Plan
A company retirement plan, such as a pension plan, in which a retired employee receives a specific amount based on salary history and years of service, and for which the employer bears the investment risk. The employee, the employer, or both may make contributions.
Defined Contribution Plan
A company retirement plan, such as a 401(k) or 403(b) plan, in which the employee elects to defer some amount of his/her salary into the plan and bears the investment risk.
Designated Beneficiaries
When an IRA account owner names a beneficiary considerably younger than him/herself with the intention that only minimum required distributions will be made, this is referred to as a "stretch" IRA. A "stretch" IRA may also be achieved when an IRA account owner names a spouse primary beneficiary. The spouse inherits the IRA and rolls it to his/her own IRA and names younger beneficiaries; and all parties take only required minimum distributions.
Discount
The amount by which a bond's par exceeds its market price. Also the amount by which the value of a closed-end fund's Net Asset Value exceeds its market price. Anything selling below its normal price. Opposite of premium.
Diversification
A portfolio strategy designed to reduce exposure to risk by combining a variety of investments. The goal of diversification is to reduce the risk in a portfolio. Volatility is limited by the fact that not all asset classes or industries or individual companies move up and down in value at the same time or at the same rate. Diversification reduces both the upside and downside potential and allows for more consistent performance under a wide range of economic conditions.
Dividend Per Share
A payment given to shareholders. Usually given as cash (cash dividend). Also called payout.
Dividend Reinvestment Plan (DRIP)
An investment plan offered by some corporations or funds enabling shareholders to automatically reinvest cash dividends and capital gains distributions, thereby accumulating more stock without paying brokerage commissions. Many DRIPs also allow the investment of additional cash from the shareholder, known as an optional cash purchase. Also called Dividend Reinvestment Program.
Dividend Yield
Annualized dividend rate divided by last closing price.
Duration
Used to measure risk in a fixed income portfolio. Duration can be defined as the approximate percentage change in net asset value for every percentage point change in interest rate. Duration is inverse so that a duration of 5, for example, means that a one- percent drop in interest rates will increase the net asset value of the portfolio by approximately 5%; vice versa if interest rates increase.
Earnings per Share Growth Projection (FY1)
Projected earnings per share growth over the current fiscal year.
Earnings per Share Growth Projection (FY2)
Projected earnings per share growth over the next fiscal year.
Effective Duration
The duration for a bond with an embedded option when the value is calculated to include the expected change in cash flow caused by changes in interest rates. This measures the responsiveness of a bond's price to interest rate changes.
Effective Rate
The yield on a debt as calculated from the purchase price. A more accurate measure of the return on a bond investment than the simple coupon payment. Computed using both the capital gain from price appreciation and the bond's yield.
Equity Fund
A mutual fund that invests primarily in stocks, usually common stocks.
Expense Ratio
The percentage of fund assets (per share) paid for operating expenses, including management fees, 12b-1 fees, administrative fees and all other costs incurred by the fund, except brokerage costs. Sales charges are not included in the expense ratio.
Fallen Angel
A bond which was investment-grade when issued but which is now of significantly lower quality.
Fixed Income Security
A security that pays a specific interest rate, such as a bond, money market instrument, or preferred stock.
Front-End Sales Load
A sales charge paid when an individual buys an investment, such as a mutual fund, limited partnership, annuity, or insurance policy.
Futures
Futures contract is an agreement to buy or sell a specific amount of a commodity or financial instrument at a particular price on a stipulated future date.
General Obligation (GO) Bond
A municipal bond secured by the taxing and borrowing power of the municipality issuing it.
Generally Accepted Accounting Principles (GAAP)
A widely accepted set of rules, conventions, standards, and procedures for reporting financial information, as established by the Financial Accounting Standards Board.
Government National Mortgage Association (GNMA or Ginnie Mae)
GNMA are mortgage pass-through securities guaranteed by a government-related entity, the Government National Mortgage Association.
Green Shoe
A provision in an underwriting agreement, which calls for the authorization of additional shares in the event of exceptional public demand.
Hedge
An investment made in order to reduce the risk of adverse price movements in a security, by taking an offsetting position in a related security, such as an option or a short sale.
Hedge Fund
A fund usually used by wealthy individuals or an institution, which is allowed to use aggressive strategies that are unavailable to mutual funds, including selling short, leverage, program trading, swaps, arbitrage, and derivatives.
High Yield Securities
A high-risk, non-investment-grade bond with a low credit rating, usually BB or lower; as a consequence, it usually has a high yield. Opposite of investment-grade bond.
Illiquid Securities (also see Liquidity Risk)
Securities, which cannot quickly and easily be converted into cash, such as real estate, collectibles, and thinly-traded securities.
Inception Date (Start Date)
The date on which something was introduced or started, such as a mutual fund.
Independent Agent
An insurance agent who represents multiple insurance companies, not just a single one.
Index
A statistical indicator providing a representation of the value of the securities which constitute it. Indices often serve as barometers for a given market or industry and benchmarks against which financial or economic performance is measured.
Individual Retirement Account (IRA)
A tax-deferred retirement account for an individual that permits individuals to set aside up to $3,000 per year, with earnings tax-deferred until withdrawals begin at age 59-1/2 or later (or earlier, with a 10% penalty).
Initial Net Asset Value
Portfolio's Net Asset Value (NAV) on its inception date.
Initial Public Offering (IPO)
The first sale of stock by a company to the public.
Interest Rate Risk
Risk that interest rates will change, affecting the value of an investment.
Investment Company Act of 1940
A set of federal laws, which regulate the registration and activities of investment companies, enforced by the SEC.
Investment Objective
The result desired by an investor or mutual fund.
Investment Philosophy
An overall set of investment principles or strategies.
Investment-Grade
An investment which is relatively safe, having a rating such as BBB or above.
Issue
A stock or bond which has been offered for sale by a corporation or government entity, usually through an underwriter or in a private placement.
Leverage
As a means of enhancing return many closed-end funds may issue senior securities or borrow money to "leverage" their investments position. This strategy allows closed-end funds the ability to enhance yield and offer higher levels of current income in comparison to most open-end funds.
Lipper Mutual Fund Industry Average
The Average level of performance for all mutual funds, as reported by Lipper Analytical Services.
Liquidity Risk
Risk that the marketplace will not have sufficient buyers when an investor seeks to sell a security or sufficient sellers when an investor seeks to buy a security.
Load-Adjusted Return
The return on a mutual fund adjusted downward to reflect any sales fees, whether front-end or back-end.
Management Fee
Expense paid to the investment advisor for managing the portfolio.
Market Capitalization
Market Capitalization is calculated as the product of price and shares outstanding.
Modified Duration
A measure of the price sensitivity of a bond to interest rate movements. Equal to the Macaulay Duration divided by (1+ (bond yield/k)) where k is the number of compounding periods per year. It is therefore inversely proportional to the approximate percentage change in price for a given change in yield. This is one of two ways to calculate duration, the other being Macaulay Duration.
Money Market
The market for short-term debt instruments maturing in one year or less. Money market instruments include T-bills, Commercial Paper, Bankers' Acceptances, CD's and Federal Funds.
Morningstar Rating System
A system created by Morningstar Inc. that ranks mutual funds based on their risk-adjusted performance over a number of years. Five stars is the highest rating assigned by Morningstar, One star is the lowest.
Mortgage Bond
A bond secured by a mortgage on a property. The value of the property may or may not equal the value of the bonds issued against it.
Municipal Bond
A bond issued by a state or a political subdivision, such as county, city, town or village. The term also designates bonds issued by state agencies and authorities. In general, interest paid on municipal bonds is exempt from federal income taxes and state and local income taxes within the state of issue.
Mutual Fund
A type of investment company that offers for sale or has outstanding securities that it has issued and which are redeemable on demand by the fund at the current net asset value. All shareholders participate in the gains or losses of the fund.
NASDAQ
An automated information network that provides brokers and dealers with price quotations on securities traded over-the-counter.
Net Asset Value (NAV)
Net asset per share. The market value of the share of a mutual fund. A mutual fund's NAV is calculated by most funds after the close of the trading day by taking the closing market value of all securities owned plus all other assets, subtracting the liabilities, then dividing the result by the total number of shares outstanding. For closed-end funds, the NAV may vary from the fund's stock price. See also premium/discount.
Net Change
The change in the price of a security from the closing price of the previous day. The net change is ordinarily the last figure in the newspaper stock price table.
Net Worth
The total value of a person's possessions minus any debts outstanding.
New York Stock Exchange (NYSE)
Located in New York City, the New York Stock Exchange is the largest stock exchange in the United States
Ordinary Income
Income generated by "normal" activities (e.g., salary, bonus, short-term capital gains, dividends, and interest income). This type of income is taxable at the taxpayer's nominal tax rate.
Over-The-Counter (OTC)
A market for securities made up of securities dealers who may or may not be members of a securities exchange. This market is a negotiated market rather than an auction market such as the NYSE.
P/E Ratio
The ratio of the last closing price and the earnings per share for the 12 months ended the last calendar quarter of the year for U.S. corporations and the fiscal year for non- U.S. corporations.
Par Value
Face value or principal value of a bond, typically $1,000.
Payment Date
The date on which a dividend, mutual fund distribution, or bond interest payment is made or scheduled to be made. Also called distribution date.
Perpetual Closed-End Fund
A closed-end fund that has no expiration date, continuing forever.
Portfolio
Holdings of securities by an individual or institution. A portfolio may contain bonds, preferred stocks, common stocks, and other securities.
Portfolio Turnover
The rate of trading activity in a fund's portfolio of investments.
Preferred Stock
Capital stocks which provide a specific dividend that is paid before any dividends are paid to common stock holders, and which takes precedence over common stock in the event of liquidation.
Premium
The amount by which a bond or stock sells above its par value. Also the amount by which a closed-end funds market price exceeds the value of its holdings.
Prepayment Risk
The risk that, due to falling interest rates, principal of a fixed income instrument will be repaid ahead of schedule altering the risk/return characteristic of an investment.
Price Change
This is the price difference ($ or %) between the two prices being compared. Ordinarily, it compares the prices on different dates or between analytical and dealer prices.
Price/Book (P/B) Ratio
The P/B ratio of a stock is calculated by dividing the current price of the stock by the company's per share book value. Generally, a high P/B ratio indicates that the price of the stock exceeds the actual worth of the company's assets.
Prospectus
The official selling circular that must be given to purchasers of new securities registered with the Securities and Exchange Commission. It highlights the much longer Registration Statement filed with the SEC. It warns that the issue has not been approved (or disapproved) by the SEC and discloses such material information as the issuer's property and business, the nature of the security offered, management's experience, and history.
Proxy
Written authorization given by shareholders to someone else to represent them and vote their shares at a shareholder meeting.
Proxy Statement
Information given to stockholders in conjunction with the solicitation of proxies.
Purchasing Power Risk
The risk that, because of inflation, the money returned from an investment will not purchase as much as the original invested dollars.
Rating Agency
Rating Agencies typically review a company's overall financial standing and assign a "credit rating" to the bonds they have issued, or will be issuing. Two of the most commonly accepted rating agencies are Standard & Poor's and Moody's.
Record Date
The date set by the issuing company, on which an individual must own shares in order to receive a declared dividend or, among other things, to vote on company affairs.
Red Herring
A preliminary version of the prospectus used by brokers to obtain indications of interest from investors. This version is "subject to completion or amendment".
Redemption
Sale of mutual fund shares to the fund sponsor. For redemption price see Net Asset Value.
Redemption Fee
See also back-end sales load.
Risk
The chance of loss on an investment due to many factors including inflation, interest rates, default, politics, foreign exchange, etc.
S&P 500 Index
The S&P 500 Index is composed of commonly held stocks, most of which are listed on the New York Stock Exchange, and is heavily weighted toward stocks with large market capitalizations. The performance of the Index is thought to be representative of the large cap stock market as a whole.
Securities and Exchange Commission (SEC)
The Securities and Exchange Commission, established by Congress to help protect investors, administers the Securities Act of 1933, the Securities Exchange Act of 1934, as well as the Investment Company Act, among others.
Settlement Date
Conclusion of a securities transaction when a broker-dealer pays for securities purchased or delivers securities sold and receives from the contra broker the proceeds of a sale. Regular way settlement, for most securities, is three business days from trade date.
Standard Deviation
A statistical measure of performance fluctuations-generally the higher the standard deviation, the greater the expected volatility of returns. Standard deviation, a historical measure, cannot be used to predict fund performance.
Suitability
An investment which meets a client's investment objectives and financial situation.
Syndicate
A group of investment banks who together underwrite and distribute a new issue of securities or a large block of an outstanding issue.
Tax-Exempt Bond
See Municipal Bond.
Tax-Free Bond Fund
Tax-free mutual fund which invests in municipal bonds.
Taxable Income
The amount of income subject to income taxes; found by subtracting the appropriate deductions from adjusted gross income.
Taxable-Equivalent Yield
An adjustment made to a tax-free yield for comparison to taxable yields.
Term Trust
A closed-end fund with a fixed termination or maturity date.
Ticker
The telegraphic system which prints or displays last sale prices and volume of securities transactions on exchanges on a moving tape within a minute after each trade.
Total Return
The return of an investment, including income from dividends and interest, as well as appreciation or depreciation in the price of the security, over a given period of time, usually a year.
Trade Date
Day on which a transaction is executed.
Trading Volume
Last day's trading volume, or trading volume over a given period, typically expressed in thousands of shares.
Transfer Agent
An agent employed by a corporation or mutual fund to maintain records, including purchases, sales, and account balances.
Treasury Bills (T-bills)
Short-term obligations of the U.S. Government. They have 13-week, 26-week, and 52-week maturities. They are purchased at a discount and mature at face value. The difference between the purchase price and maturity value (the amount of the discount) is considered interest.
Underwriter
Assists corporations in issuing new securities to the public. The usual practice is for one or more underwriters to buy outright from a corporation a new issue of stocks or bonds. The group forms a syndicate and sells the securities to individuals and institutions.
Volatility
The relative rate at which the price of a security moves up and down.
Wrap Account
Account in which a brokerage helps an investor find a money manager in exchange for a flat quarterly or annual fee, which covers all administrative and management expenses. Sometimes includes funds of funds.
Year-to-Date (YTD)
For the period starting January 1 of the current year and ending today.
Yield
The dividends or interest paid by a security (stock, bond, fund, etc.) expressed as a percentage of the current price. It is calculated by taking the dividend amount and dividing it into the current price of the security.
Yield Curve
A curve that shows the relationship between yields and maturity dates for a set of similar bonds, usually Treasuries, at a given point.
Yield to Maturity
The yield of a bond to maturity takes into account the price discount from, or premium over, the face amount. It is greater than the current yield when the bond is selling at a discount and less than the current yield when the bond is selling at a premium.
Zero Coupon Bond
A bond sold at a substantial discount, which does not pay periodic interest.