Bond
A bond is a debt security in which an investor lends money to an issuer, such as a government or company, in return for scheduled interest payments and repayment of the principal at maturity.
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Coupon
A coupon is the periodic interest payment a bond issuer makes to bondholders, normally stated as an annual percentage of face value called the coupon rate.
Credit Spread
A credit spread is the extra yield a bond pays over a comparable-maturity benchmark, such as a government bond, to compensate investors for credit, liquidity and other risks. It is usually quoted in basis points, where 100 basis points equal one percentage point.
Duration
Duration measures how sensitive a bond's price is to changes in interest rates, expressed in years. Macaulay duration is the present-value-weighted average time to receive the bond's cash flows, and modified duration converts it into an approximate percentage price change for a one percentage point change in yield.
Face Value (Par Value)
Face value, also called par value, is the amount a bond issuer promises to repay at maturity and the base on which the coupon is calculated. It is fixed by the bond's terms and does not change when the market price moves.
Yield to Maturity (YTM)
Yield to maturity (YTM) is the single annualized rate that discounts all of a bond's remaining scheduled coupons and principal to its current market price. It summarizes the return implied by buying at today's price and holding until maturity.