cushion bond investment & finance definition
A high-coupon bond that sells at a price only slightly above par because of a call provision permitting the issuer to repurchase the security near its current price.
CUSHION BOND - A bond trading at a higher dollar price than current coupon rates that is priced to the call and creates a substantially higher yield to maturity as compared to yield to call.
Cushion bonds
High-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.
 See also: Coupon Rate, Volatility, Yield, Yield to Maturity, Maturity
|
