Income Bond

AAA

DEFINITION of 'Income Bond'

A type of debt security in which only the face value of the bond is promised to be paid to the investor, with any coupon payments being paid only if the issuing company has enough earnings to pay for the coupon payment.

INVESTOPEDIA EXPLAINS 'Income Bond'

The income bond is a somewhat rare financial instrument which generally serves a corporate purpose similar to that of preferred shares. It may be structured so that unpaid interest payments accumulate and become due upon maturity of the bond issue, but this is usually not the case; as such, it can be a useful tool to help a corporation avoid bankruptcy during times of poor financial health or ongoing reorganization.



RELATED TERMS
  1. Reorganization

    A process designed to revive a financially troubled or bankrupt ...
  2. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
  3. Coupon

    The interest rate stated on a bond when it's issued. The coupon ...
  4. Maturity Date

    The date on which the principal amount of a note, draft, acceptance ...
  5. Maturity

    The period of time for which a financial instrument remains outstanding. ...
  6. Bond

    A debt investment in which an investor loans money to an entity ...
Related Articles
  1. Bonds & Fixed Income

    Asset Allocation In A Bond Portfolio

  2. Bonds & Fixed Income

    An Overview Of Corporate Bankruptcy

  3. Bonds & Fixed Income

    Advanced Bond Concepts

  4. Bonds & Fixed Income

    How long can I hold my HH/H Bonds and ...

Hot Definitions
  1. Capitulation

    When investors give up any previous gains in stock price by selling equities in an effort to get out of the market and into ...
  2. Turkey

    Slang for an investment that yields disappointing results or turns out worse than expected. Failed business deals, securities ...
  3. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  4. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  5. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  6. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
Trading Center