Cushion Bond

外汇网2021-06-19 20:55:09 169

A type of callable bond that sells at a pmium because the issued coupon payments are above market interest rates.

|||Mostly chosen by investors interested in generating high income conservatively. As interest rates rise, the cushion bond depciates less than regular bonds, since it already pays a pmium. On the other hand, as interest rates fall, the cushion bond's value appciates less due to the risk of the company calling the bond.

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