EE Bond Terms
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Bear market – When the trend of security prices is expected to fall or is falling. A time period when investing in bonds is more appreciated than during a bull market. A time when it is hard to make good gains except on short sells
Bond – A fixed-income security where the investor loans money to a corporation, municipality or government for a defined period of time at a fixed interest rate. The issuer uses the income derived from the sale of a bond to finance specific projects or activities. The buyer is the creditor and the issuer the debtor
Bond principal – The amount of funds loaned to the bond issuer
Bond purchase –Lending your money to an entity for a specified period of time for a specified amount of interest with a specified date that the money loaned will be returned
Bull market – When the trend of a group of securities is up. The term is derived from the way a bull attacks its opponent, head and horns up and charging forward. It is a period of time when investors are optimistic and confident in the markets upward clime
Coupon – The interest rate that is determined by the issuer for a bond, determined by credit quality and duration of the bond
Face Value – Also known as “par value” or “par” is the amount to be paid to the holder at maturity. With EE bonds the face value of a paper bond and an electronic bond is the same but the investor’s price is different
Fixed income – The return amount of the security at maturity is known at time of purchase. If you purchase a $50 EE bond it will pay back exactly $50 not including interest
Issuer – The entity that is indebted by the bond i.e. the one that receives the funds for the bond and must pay the bond back. For EE bonds the issuer is the United States Government
Maturity date – Is the date when the loaned funds are to be paid back. EE bonds have different length of time between issue and maturity related to the date of issue. The bond maturity is 20 years for EE bonds issued in 2008
Risk Free – Government bonds are described as being risk free since the government is always getting an income with which it can pay the bond amount back. No bonds are totally risk free. A bond is a loan and there are many reasons and ways that a bond can be defaulted on
Semi-annually – When the interest is paid every 6 months it is said to be paid semi-annually
TreasuryDirect – The agency where United States government issued bonds can be bought and serviced. A part of the Bureau of Public Debt started so that the public could buy government bonds directly.
Go back to our EE Series Bonds 101 Guide or continue the guide with Using EE Series Bonds for Education
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