Bond
A bond is a debt instrument with a maturity of more than one year. Bond issuers include the federal government, local governments, utilities, corporations, and several other types of institutions. These issuers (borrowers) promise to repay the investors (lenders) the principal loan amount at a specified time. In addition, interest-bearing bonds make periodic interest payments.
Consumer Debt
Consumer debt consists of the loans individuals use for personal consumption. This is in contrast with the business or government debt. Examples of consumer debt include credit cards, student loans, auto loans, mortgages, and payday loans. Economists consider consumer debt to be suboptimal because it often has high interest rates. This makes it difficult to eliminate.
Credit Card
A credit card is a thin rectangular piece of plastic or metal which facilitates consumer debt. This payment card entitles the holder to use funds from the issuing company to purchase goods and services. Cardholders must pay back the borrowed money, plus any applicable interest and agreed-upon charges. They must do so either in full by the billing date or over time.
Financial Liability
A financial liability is a monetary obligation that one must pay, usually over time. Examples of liabilities include taxes due, unpaid bills, mortgage payments, loans, and credit card debt.
Treasury Bill
A Treasury Bill (T-Bill) is a short-term debt obligation of the United States government. These securities have a maturity period of one year or less and sell at a discount from face value. Given their backing by the U.S. Department of the Treasury, investors generally regard T-Bills as low-risk and secure.
Underwriting
Underwriting is the process through which an individual or institution evaluates and assumes a financial risk. Generally, such risk involves insurance, investments, or loans. Thus, insurance companies indemnify against future loss, damage, or liability. Investment bankers guarantee the purchase of entire issues of stocks or bonds. And lending institutions provide capital for mortgages. The term “underwrite” dates back to the marine insurance market in 17th century. At famed insurer Lloyd's of London, each financial backer would write his name under the amount of maritime risk he was willing to assume for a specified premium.
Yield
Yield is the income-only return on an investment over a set period of time. Usually stated as a percentage of the original investment, the calculation for yield is as follows:
Yield = Net Realized Return / Principal Amount
This cash flow measure applies to fixed-income securities, common stocks, preferred stocks, and convertible stocks and bonds. It also pertains to annuities and real estate investments.
Zero-Coupon Bond
A zero-coupon bond is a debt security that pays no interest during the term of the loan. Instead, these accrual bonds, which trade at a deep discount, offer full face value profits at maturity.