Indexed bond

Indexed bond

Bond whose payments are linked to an index, e.g., the consumer price index.

Inflation-Indexed Securities

A bond or other fixed-rate security with an interest rate that varies according to inflation. An inflation-indexed bond, for example, may pay a fixed coupon plus an additional coupon with the amount adjusted every so often according to some inflation indicator, such as the Consumer Price Index. If these securities are held to maturity, then the investor guarantees that the return will exceed the rate of inflation. Inflation-indexed securities exist to provide a low-risk investment vehicle in which the return is guaranteed not to fall below the rate of inflation. See also: I Bond.
References in periodicals archive ?
In Hot Tip: Nominal Exchange rates and Inflation Indexed Bond Yields (NBER Working Paper No.
Second, we assume the government can issue an indexed bond that promises a next-period payment that is a function of next-period income.
An increase in the spread between the nonindexed bond and the indexed bond indicates an increased expectation of more inflation and vice versa.
New South Wales Treasury Corp, the funding arm of Australia's New South Wales State government, has said that it has appointed Merrill Lynch (NYSE: MER) (OOTC: MERIZ), a part of Bank of America Corporation (NYSE: BAC), to its capital indexed bond dealer panel.
The traditional approaches of fixed income or indexed bond oriented strategies have limitations which we do not want to accept," it said.
This is despite the Government's relatively successful US-dollar indexed bond offered last week.
American Century Inflation Adjusted Treasury (ACTIX), GMO Inflation Indexed Bond (GMIIX), and 59 Wall Street Inflation-Indexed Securities (FNISX).
Finally, the article shows that historically the market risk of an indexed bond has been small compared to that of a conventional bond with with similar maturity.
Thus, an indexed bond purchased at time t pays one unit of the endowment good with certainty at time t + 1.
This indexed bond contributes to making our portfolio far more diverse.
Among the 12 funds included in the allocations are: MainStay Large Cap Growth Fund, MainStay All Cap Growth Fund, MainStay Common Stock Fund, MainStay Map Fund, MainStay Small Cap Opportunity Fund, MainStay Small Cap Value Fund, MainStay Value Fund, MainStay International Equity Fund, MainStay Floating Rate Fund, MainStay High Yield Corporate Bond Fund, MainStay Intermediate Term Bond Fund and MainStay Indexed Bond Fund.
A unit of Swiss Re New Markets, SRCM structured and placed the first California earthquake bond and the first insurance industry loss indexed bond (SR Earthquake Fund) in 1997.