| Capital gain | The difference between the price that has been paid for an asset and the higher price at which it is sold; contrasts with a capital loss, where the price paid exceeds the price at which the asset is sold.
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| Capital loss | The difference between the price that has been paid for an asset and the lower price at which it is sold; contrasts with capital gain.
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| Consol | A coupon bond in which the issuer makes regular interest payments forever, never repaying the principal; a coupon bond with infinite time to maturity.
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| Current yield | A bond's yearly coupon payment divided by its current market price.
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| Default risk | The probability that a borrower will not repay a loan; see also credit risk.
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| Holding period return | The return from purchasing and selling a bond (applies to bonds sold before or at maturity).
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| Inflation risk | The risk that the real value of the payments from owning a bond will be different from what was expected; that the real interest rate on a bond will differ from what was expected.
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| Inflation-indexed bonds | A bond whose yield equals a fixed real interest rate plus realized (as opposed to expected) inflation.
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| Interest-rate risk | 1. The risk that the interest rate will change, causing the price of a bond to change with it. 2. The risk that changes in interest rates will affect a financial intermediary's net worth. It arises from a mismatch in the maturity of assets and liabilities.
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| Investment horizon | The length of time an investor plans on holding an asset.
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| Stripped bond | A bond whose principal and coupon payments are traded separately.
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| U.S. Treasury bill | A zero-coupon bond in which the U.S. government agrees to pay the bondholder a fixed dollar amount on a specific future date; has a maturity of less than one year.
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| Yield on a discount basis | The return to holding a bond; differs from yield to maturity because it divides the difference between the face value and the price by the face value and because it uses a 360-day year.
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| Yield to maturity | The yield bondholders receive if they hold the bond to its maturity when the final principal payment is made.
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| Zero-coupon bond | A promise to pay the face value of the bond on a specific future date, with no coupon payments.
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