Cushion bonds

Definition:

High-coupon bonds trading at a premium that tend to fall in price much less than comparable bonds when interest rates rise (hence the cushion effect), because of their high coupons.

Investing Essentials


Copyright © 2011 Campbell R. Harvey, Professor of Finance, Fuqua School of Business at Duke University

Term of the Day

Cost of limited partner capital

The discount rate that equates the after-tax inflows with outflows for capital raised from limited partners.

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