Definition

The nominal dollar amount assigned to a security by theissuer. For an equity security, par is usually a very small amount that bears no relationship to its market price, exceptfor preferred stock, in which case par is used to calculatedividend payments. For a debt security, par is the amount repaid to the investor when the bond matures (usually,corporate bonds have a par value of $1000, municipal bonds$5000, and federal bonds $10,000). In the secondary market, a bond's price fluctuates with interest rates. Ifinterest rates are higher than the coupon rate on a bond, the bond will be sold below par (at a "discount"). If interestrates have fallen, the price will be sold above par. here also called face value or par value. Bullet bond A bond that is not able to be redeemed prior to maturity. A bullet bond is usually more expensive than a callable bond (in that the interest rate is lower), since the investor is protected against the possibility of the bond being called when market interes rates fall. also called bullet bond. The bullet bond is an example of a bond that cannot be redeemed before the date of maturity has arrived. This characteristic separates the bullet bond from a callable bond, in that thebullet bond has a guaranteed interest rate that cannot be changed at any time before maturation. Bullet bonds are usually issued with a lower rate of interest. This is because the bullet bond is considered to be a low risk investment. Because it is not possible to call the bond before the maturation date, there is no opportunity for the applied interest rate to rise or fall. While the interest rate is fixed, the investor will pay for this level of protection. The typical bullet bond is more expensive than callable bonds, where there is some possibility of being impacted by falling market interest rates. For people who are new to investing, the bullet bond can be an excellent way to begin establishing a portfolio of assets. Because the bond maturity date for a bullet bond is fixed, and the rate of interest guaranteed, there is very little risk involved. While the return on the investment will be minimal in most cases, the use of the bullet bond is a practical and safe way to slowly build a credible bank of assets.

Definition of 'Curve Steepener Trade'

A strategy that uses derivatives to benefit from escalating yield differences that occur as a result of increases in the yield curve between two Treasury bonds of different maturities. This strategy can be effective in certain macroeconomic scenarios in which the price of the longer term Treasury is driven down.

Investopedia explains 'Curve Steepener Trade'

For example, an individual could employ a curve steepener trade by using derivatives to buy five-year Treasuries and short 10-year Treasuries. One macroeconomic scenario in which using a curve steepener trade could be beneficial would be if the Fed decides to significantly lower the interest rate, which could weaken the U.S. dollar and cause foreign central banks to stop buying the longer term Treasury. This decrease in demand for the longer term Treasury should cause its price to fall, causing its yield to increase; the greater the yield difference, the more profitable this strategy becomes.
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