Fixed-Income Instrument FeaturesLocked: included in All Access

The building blocks of every bond and loan: who issues it, when it matures, how much principal is repaid, how interest is paid (fixed, floating or zero), where it ranks and what options it carries; how those features turn into cash flows and simple yield measures; and what the indenture says about sources of repayment, collateral and the affirmative and negative covenants that protect lenders.

1. 1. Bonds, issuers, maturity and principalA fixed-income instrument is a contract in which a borrower takes investors' money today and commits to pay interest and repay principal on set dates, and its first features are who borrows, for how long and how much.Locked: included in All Access12 min
2. 2. Coupons: fixed, floating and zeroInterest on a bond comes in one of three forms: a fixed coupon, a floating coupon that resets with a market reference rate, or no coupon at all with the interest built into a discount price.Locked: included in All Access14 min
3. 3. Seniority, embedded options and yieldWhere a bond ranks in repayment and which embedded options it carries shape its risk, and its price and expected cash flows together give its yield, which moves opposite to price.Locked: included in All Access13 min
4. 4. The indenture, repayment sources and collateralThe bond indenture is the legal contract behind a bond, and among other things it tells investors where the money to repay them will come from and whether specific assets stand behind the promise.Locked: included in All Access12 min
5. 5. Covenants: affirmative versus negativeCovenants are the enforceable promises in an indenture: affirmative covenants say what the issuer must do, negative covenants say what it must not do, and both give bondholders recourse if broken.Locked: included in All Access14 min