catastrophe bond investment & finance definition
A debt security with a payoff tied to the relative severity of a natural disaster such as a hurricane or earthquake.
A catastrophe bond is one way to diversify the investment portfolio, and provide at least one investment that has the potential for a high level of return.
Catastrophe Bond - CAT
A high-yield debt instrument that is usually insurance linked and meant to raise money in case of a catastrophe such as a hurricane or earthquake.
catastrophe bond A high-yield, insurance-backed bond containing a provision causing interest... catastrophic coverage A type of insurance coverage for specific catastrophic events such as death, fire, flood, and some medical conditions.
Act-of-God Bond A Catastrophe Bond (q.v.). (Source: Sophie Belcher, "USAA to Try Again with Hurricane Bond, Derivatives Week, 5/5/97.) ADR American Depository Receipt (q.v.).
 See also: Investment, Security, Risk, Yield, Share
  
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