Bearer Instrument

AAA

DEFINITION of 'Bearer Instrument'

A bearer instrument, or bearer bond, is a type of fixed-income security where no ownership information is recorded and the security is issued in physical form to the purchaser. The holder is presumed to be the owner, and whoever is in possession of the physical bond is entitled to the coupon payments.

To receive coupon payments, the bondholder must clip the coupons attached to the bond and submit them for payment. This contrasts with book-entry, where ownership information is noted in a computer database and there are no physical bond certificates.

INVESTOPEDIA EXPLAINS 'Bearer Instrument'

It has not been legal to issue bearer bonds in the U.S. municipal or corporate markets since 1982. The only bearer bonds available in the secondary market are long-dated maturities issued before this date, which are becoming increasingly scarce.

RELATED TERMS
  1. Bearer Bond

    A fixed-income instrument that is owned by whoever is holding ...
  2. Secondary Market

    A market where investors purchase securities or assets from other ...
  3. Bearer Form

    A security not registered in the issuing corporation's books ...
  4. Holder Of Record

    The name of the person who is the registered owner of a security ...
  5. Coupon

    The interest rate stated on a bond when it's issued. The coupon ...
  6. Bond

    A debt investment in which an investor loans money to an entity ...
RELATED FAQS
  1. How does the money from the interest on my bond get to me?

    When you buy a regular coupon bond, you are entitled to a coupon, which is typically paid at regular intervals, and the face ... Read Full Answer >>
  2. What is the difference between compounding interest and simple interest?

    Interest is the cost of borrowing money, where the borrower pays a fee to the owner for using the owner's money. The interest ... Read Full Answer >>
  3. What is the relationship between modified duration and interest rates?

    Modified duration is a formula that measures the value of a bond in relation to changes in interest rates. Modified duration ... Read Full Answer >>
  4. How does inflation affect a company's short-term investments?

    Inflation marginally erodes a company's short-term investments. Short-term investments are typically ultra-safe liquid assets, ... Read Full Answer >>
  5. Which asset classes are the most risky?

    Equities is the riskiest class of assets. Dividends aside, they offer no guarantees, and investors' money is subject to the ... Read Full Answer >>
  6. How do you find accrued interest on a bond?

    A bond is a debt instrument issued by a company, government agency or municipality to raise money. Interest payments are ... Read Full Answer >>
Related Articles
  1. Investing Basics

    Old Stock Certificates: Lost Treasure Or Wallpaper?

    What if you've discovered some old shares in bearer form? Follow our tips and find out what they're worth.
  2. Investing Basics

    How To Create A Modern Fixed-Income Portfolio

    Exposure to different asset classes is required to generate income, reduce risk and beat inflation. Find out how bonds can help.
  3. Bonds & Fixed Income

    The Basics Of Municipal Bonds

    Investing in these bonds may offer a tax-free income stream but they are not without risks.
  4. Personal Finance

    Bearer Bonds: From Popular To Prohibited

    These coupon bonds are transferable, negotiable and anonymous - so why aren't they sold in the U.S.?
  5. Investing Basics

    Treasury Inflation-Protected Securities (TIPS)

    Treasury inflation-protected securities are treasury securities that make adjustments for inflation as reflected in the Consumer Price Index.
  6. Investing Basics

    What is the Coupon?

    In the financial world, “coupon” represents the interest rate on a bond.
  7. Retirement

    Facing Retirement? Look Beyond 100% Bonds

    Retiring doesn't mean putting all your money in bonds. There are two things to consider when it comes to be invested in bonds: growth and inflation.
  8. Mutual Funds & ETFs

    Is the PowerShares (PFEM) ETF a Good Bet Now?

    What you need to know if you are considering trading PowerShares Fundamental Emerging Markets Local Debt ETF.
  9. Mutual Funds & ETFs

    Anatomy of Emerging Markets Debt ETF (EMLC)

    This emerging market bond ETF offers a high yield, but there are dangers. Find out why.
  10. Trading Strategies

    How to Pick the Best Dividend Stocks

    Dividend stocks can make you rich, but you have to be patient.

You May Also Like

Hot Definitions
  1. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  2. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  3. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  4. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
  5. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
Trading Center