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Cushion bonds |
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Cushion bondsHigh-coupon bonds that sell at only at a moderate premium because they are callable at a price below that at which a comparable noncallable bond would sell. Cushion bonds offer considerable downside protection in a falling market.Cushion bonds Similar MatchesRedemption cushionRedemption cushionThe percentage by which the conversion value of a convertible security exceeds the redemption price (strike price). 20% cushion rule20% cushion ruleGuideline that revenues from facilities financed by municipal bonds should exceed the operating budget plus maintenance costs and debt service by at least 20% to allow for unforeseen expenses. CushionCushionThe minimum period between the time a bond is issued and the time it is called. Cushion theoryCushion theoryThe theory that a stock with many short positions taken in it will rise, because these positions must be covered by the stock. Safety cushionSafety cushionIn a contingent immunization strategy, the difference between the initially available immunization level and the safety-net return. |
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