Straight Bond


DEFINITION of 'Straight Bond'

A bond that pays interest at regular intervals, and at maturity pays back the principal that was originally invested. Straight bonds are debt instruments because they are essentially loaning money (creating debt) to an entity. The entity (government, municipality, or organization) promises to pay the interest on the "debt" and at maturity pay back the original loan.


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BREAKING DOWN 'Straight Bond'

A straight bond is the most basic of debt investments. It is also knows as a plain vanilla bond because there are no additional features that other bonds might have. For example, some bonds can be converted into shares of common stock. As with all bonds there is default risk, which is the risk that the company could go bankrupt and no longer honor its debt obligations.

  1. Plain Vanilla

    The most basic or standard version of a financial instrument, ...
  2. Bond

    A debt investment in which an investor loans money to an entity ...
  3. Bond Ratio

    A financial ratio that expresses the leverage of a bond issuer. ...
  4. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with ...
  5. Municipal Bond

    A debt security issued by a state, municipality or county to ...
  6. Overlapping Debt

    The financial obligations of one political jurisdiction that ...
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  1. What are the risks of investing in a bond?

    The most well-known risk in the bond market is interest rate risk - the risk that bond prices will fall as interest rates ... Read Full Answer >>
  2. Do hedge funds invest in bonds?

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  3. Do mutual funds pay dividends or interest?

    Depending on the type of investments included in the portfolio, mutual funds may pay dividends, interest, or both. Types ... Read Full Answer >>
  4. Can mutual funds only hold bonds?

    While some mutual funds include bonds in addition to other asset types, certain funds, aptly named bond funds, hold only ... Read Full Answer >>
  5. What are the risks of annuities in a recession?

    Annuities come in several forms, the two most common being fixed annuities and variable annuities. During a recession, variable ... Read Full Answer >>
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