Cushion Bond

A type of callable bond that sells at a premium 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 depreciates less than regular bonds, since it already pays a premium. On the other hand, as interest rates fall, the cushion bond's value appreciates less due to the risk of the company calling the bond.


Investment dictionary. . 2012.

Look at other dictionaries:

  • cushion bond — Fin a bond that pays a high rate of interest but sells at a low premium because of the risk of its being called soon …   The ultimate business dictionary

  • cushion bonds — An informal name for callable bonds with long maturities that have coupon rates well above current market rates. Because these bonds have such high coupon rates, they trade at prices and yields calculated to the call date rather than to the… …   Financial and business terms

  • Cushion bonds — High coupon bonds that sell at only at a moderate premium because they are callable at a price below that at which a comparable non callable bond would sell. Cushion bonds offer considerable downside protection in a falling market. The New York… …   Financial and business terms

  • Net capital rule — The uniform net capital rule is a rule created by the U.S. Securities and Exchange Commission ( SEC ) in 1975 to regulate directly the ability of broker dealers to meet their financial obligations to customers and other creditors.[1] Broker… …   Wikipedia

  • Late-2000s financial crisis — The TED spread (in red) increased significantly during the financial crisis, reflecting an increase in perceived credit risk …   Wikipedia

  • Constant proportion portfolio insurance — (CPPI) is a capital guarantee derivative security that embeds a dynamic trading strategy in order to provide participation to the performance of a certain underlying asset. See also dynamic asset allocation. The intuition behind CPPI was adopted… …   Wikipedia

  • Billiard Games — ▪ 2006 Introduction Carom Billiards.       In January 2005 Sonny Cho of Flushing, N.Y., won his first U.S. championship in three cushion (carom) billiards by beating defending champion Pedro Piedrabuena 50–45 in the deciding game. Piedrabuena… …   Universalium

  • china — /chuy neuh/, n. 1. a translucent ceramic material, biscuit fired at a high temperature, its glaze fired at a low temperature. 2. any porcelain ware. 3. plates, cups, saucers, etc., collectively. 4. figurines made of porcelain or ceramic material …   Universalium

  • China — /chuy neuh/, n. 1. People s Republic of, a country in E Asia. 1,221,591,778; 3,691,502 sq. mi. (9,560,990 sq. km). Cap.: Beijing. 2. Republic of. Also called Nationalist China. a republic consisting mainly of the island of Taiwan off the SE coast …   Universalium

  • bank — bank1 /bangk/, n. 1. a long pile or heap; mass: a bank of earth; a bank of clouds. 2. a slope or acclivity. 3. Physical Geog. the slope immediately bordering a stream course along which the water normally runs. 4. a broad elevation of the sea… …   Universalium

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.