Glossary

A -

American options
An American option is a put or call option that can be exercised and settled at any time from the date that the option is written, up to the date that the option expires.

Arbitrage
The simultaneous purchase and sale, in two different markets, of a financial asset, a commodity, currency, or bill of exchange, in order to profit from a price discrepancy. True arbitrage is risk-free. The arbitrage process plays a central role in ensuring that prices are consistent in different markets.

B -

Base Currency
The base currency, or primary currency, is the first quoted currency in a currency pair. For example with EUR/USD, the base currency is Euros.

Bear
An investor who believes that the market or the value of a particular share is going to decrease.

Baer market
Describes a situation where the majority of shares are dropping in price and the market is generally declining.

Bear sqeeuze
A bear squeeze occurs when a share or commodity has been heavily short sold on a strong expectation that it will fall, instead of which it rises. Investors who have bear sold then hasten to buy the asset to cover their bear positions. If the asset is in short supply, the price quickly rises to absurd levels in what is called a bear squeeze. In the derivatives market a bear squeeze often follows a period of negative sentiment when the price of a contract reverses and shorts and call option writers pile into the market to cover naked positions, rapidly driving prices up.

Beta
The second letter of the Greek alphabet, used by Wall Street to describe the volatility of a stock relative to a stock market index. Beta is regarded by some as a measure of stock market risk.

Bid price
The price offered by a buyer for a share, commodity, future, option or other instrument.

Bond
A loan instrument used as a negotiable security with a fixed percentage return, usually redeemable at a specified date. Bonds are often sold by government and semi-government bodies to raise long-term finance. Bonds are bought and sold in the bond market with prices varying according to the interest rate. As the interest rate rises the price of bonds falls so that new buyers of existing bonds in the secondary market earn a competitive effective rate of interest. Bonds are often referred to as GILTS or SEMI-GILTS.

Brokers´s note
A confirmation sent to the buyer or seller of shares by his stockbroker detailing price, quantity, date, dealing costs, and the net amount due to or from the client.

Bull
An investor who believes that the value of a particular contract, share, sector or the market as a whole is on the increase.

C -

Capital Gains Tax
Tax payable at a rate equivalent to the taxpayer's highest rate of income tax on any gains over the CGT allowance from the sale, transfer or disposal of securities or other asset subject to this tax.

Capitalisation issue
Also called "bonus issues", these involve no transfer of cash between the company and its members. They occur when a company feels it desirable to convert part of its reserves (profits from earlier years that have not been paid out as dividends) into new shares. This often arises if the number of shares in issue is small in relation to the total value of the business, making them hard to come by or too highly priced to be easily traded. The effect from a member's (shareholder's) point of view is to give him a greater number of shares than he already has. As the company itself has not grown any larger or smaller in the process, and his percentage holding has remained unchanged, his stake merely consists of more shares, each representing less of the company.

Carry transaction
A transaction where an asset is bought from a holder for a specific settlement date and simultaneously sold to the same party for settlement at a later date. This can be done to obtain finance instead of using a repo transaction. In the case of the carry transaction the grantor of the finance becomes the owner of the asset for the period between the two settlement dates.

Cash settlement
Cash settlement is a mechanism that allows certain options and futures to be settled without delivery of the underlying asset taking place. Instead of physical delivery of grain, dollars, or scrip, cash settlement results in the difference between the contract price and the spot price at expiry being paid to the long position if prices have risen, or vice versa if prices have fallen. For options the difference between the current settlement price on the underlying asset and the option's strike price is paid to the option holder when the option is exercised.

Cose-out date
The expiry date of listed futures and options.

Commodities
Products such as gold and silver which are traded on margin. Commodities are used in the production of goods.

Commodities contract
A contract obliging one person (the seller) to supply to another person (the buyer) a specified quantity and grade of a particular commodity on a certain date at an agreed price, and obliging the buyer to accept delivery of the commodity. The term can mean either a future or forward contract. Settlement can sometimes be in cash.

Consideration
The settlement amount or amount paid at settlement of a bond transaction. This amount is determined by calculating the all-in-price using the rate (YTM) at which the transaction was concluded.

Contracts for Difference (CFDs)
This is an agreement between a client and a provider to exchange the difference between the opening and closing value of the contract.

Coupon rate
The rate paid on the nominal value of a fixed interest-bearing money or capital market investment such as a bond.

Cum dividend
Shares are said to be cum div in the period between declaration of the dividend and the last day to register for the dividend. A sale of shares while they are cum div passes on the right to the next dividend to the transferee (or buyer). Also meaning 'with' this is the opposite of 'ex', and is used to indicate that the buyer of a security is entitled to participate in whatever forthcoming event is specified.

Cum interest
Interest-bearing instruments are said to be cum interest before or on the next LDR date and after the previous interest payment date.

Currencies
Also known as Foreign Exchange (FX or Forex), you have access to some of the major world currency crosses. Currencies are always traded as one currency against another, for example GBP/USD means you are trading sterling against the US dollar.

D -

Derivative
Instruments that derive their value from another security (the underlying security), such as a share, index, currency etc. CFDs are a type of derivative, as are covered warrants and futures options.

Diversification
Diversification is commonly regarded as a way of reducing risk by being less exposed to movements in any single instrument. You can create different levels of diversification by spreading your risk amongst several shares and other asset classes, mixing long and short positions, trading in sectors and indices.

Dividends
With CFDs you receive the dividend if you are long on the day the shares go ex-dividend. If you are short then you will need to pay the dividend. This is the same with rolling spread bets, although dividends are already built into the quote for quarterly spread bets.

E -

Earnings per share
A company's earnings (profit) divided by the number of ordinary shares in issue, usually expressed as a number of cents per share.

Earnings yield
Earnings per share expressed as a percentage of the current market price of the share. For example, a company with 25 cents earnings per share and a market price of 250 cents would have an earnings yield of 10%.

Equity
Equity means "ownership". In a company, that portion of share capital which carries risk and shares in profits through dividends that are dependent on profitability, is known as "equity". Ordinary shares are often called "equities", and other types of shares, which share in the risk to a lesser extent (such as convertible or participating preference shares) are known as "near equities". The equity of a company is the share capital and reserves of the company, which is the same as its net assets.

Eurodollar
USdollars held outside america and traded freely for other currencies.

European option
Unlike an american option, the european option can only be settled on the expiry date and not during the life of the option. It is sometimes pointed out that european options can be exercised at any time (i.e., the exercise notice or declaration can be delivered well before the expiry date), but this is of no value, as the settlement only occurs on expiry, by which time changes in the price of the underlying asset may have made the option unprofitable.

Exchange
Generally refers to a recognised stock market, for example, the London Stock Exchange or NASDAQ.

Ex-dividend
Means "without" this is the opposite of Cum, and is used to indicate that the buyer of a security is not entitled to participate in whatever forthcoming event is specified. Ex cap, ex div, ex rights etc. A share sold ex-dividend means the buyer is not entitled to receive the recently declared dividend.

A share is ex div once the last day to register has passed. Any sales after the last day to register are done on the basis that the dividend accrues to the buyer, even if it has not yet actually been paid out.

Ex interest
Interest-bearing instruments are said to be ex-interest after the ldr date and on or before the next interest payment date. For transaction with a settlement date falling in this period, the buyer will receive the full amount of interest for the interest period on the interest payment date.

Expiry date
The last date on which the rights attached to an option may be exercised. The day after expiry the option has no value. Also used to refer to the date on which a futures contract matures (therefore anonymous with delivery date). On the expiry date the value of an option is normally equal to the intrinsic value of an option limited to a minimum or RO.

Exchange
Generally refers to a recognised stock market, for example, the London Stock Exchange or NASDAQ.

F - I

F -

Financial future
A futures contract on a financial asset. It is thus a contract to buy and sell through an exchange a financial asset on a certain future date at a price determined at the closing of the contract between two parties.

Financial Spreads
Also known as spread betting. This is an agreement between a client and a provider to exchange the difference between the opening and closing value of the bet at a future date ??" this date may or may not be specified depending upon what you are trading. You are speculating on the direction of the future price movements in an underlying instrument; you indicate an amount you want to bet on each point movement. Your profit or loss is simply the difference between the opening price and closing price of your bet, times your stake.

Financing
Often CFD positions involve some sort of daily financing. If you are long you will be debited interest for every day you hold your position. This rate will be based on the current LIBOR rate which could be different depending on which countries underlying exchange the instrument you are dealing in trades. If you are short you will receive a credit for every evening you hold your position. This could be zero, depending on the current LIBOR rate. Rolling spread bets follow the same rules as CFDs, although financing is built into the quote for quarterly spread bets. See ‘interest rate differential’ for financing on currency CFDs.

Forward contract
A forward contract is an agreement between two principals respectively to buy and sell a commodity at some specified future date for a set price. Both parties are obliged. The primary difference between forward contracts and futures contracts is that the latter are standardised and traded through an exchange, enabling a secondary market in the contracts themselves to develop.

Futures market
A market for standardised forward contracts. Buyers and sellers in the futures market commit themselves respectively to buying and selling commodities, currencies, or other instruments at a specified future date and at a predetermined price. These markets enable producers and consumers to plan ahead by fixing the price they will pay or receive in the future, enabling them to reduce the risk of price fluctuations.

Futures contract
An agreement in which the seller undertakes to deliver a commodity or other instrument at a specified future time and at a predetermined price, and the buyer undertakes to accept delivery. Futures contracts differ from forward contracts only in that they are standardised in terms of delivery, grade, payment terms, and certainty of performance, and that they are traded through exchanges.

G -

Gearing
Also commonly referred to as leverage. CFDs and spread bets are geared products as you are only required to deposit a proportion of your total transaction size in cash in your account. Some instruments are more highly geared than others e.g. currencies for instance only require 2% margin, whilst shares usually require 10% or more. The effect of gearing multiplies losses and gains.

Good for Day (GFD) order
A limit or stop order which automatically expires at the end of the day's standard market trading session if it is not filled or cancelled.

Good ‘til Cancelled (GTC) order
A limit or stop order which has no expiry date. It will wait to be executed until either the instruments hits the appropriate price or until you cancel the order.

Guaranteed Stops order
Similar to an ordinary stop order, except that it guarantees that you exit your position at the price you set as opposed to only closing you out of your position at the first available price which could be a long way from the price you placed your stop at. For the benefit of this ‘insurance’ against a sudden movement in the instrument (also known as ‘gapping’) you have to pay a premium to take out a guaranteed stop.

H -

Hedge
To take a position that off-sets an existing position in order to reduce the price risk in the open position. A fund manager might be obliged in terms of his mandate to hold a percentage of his portfolio in gilts. If he fears that interest rates will rise (thus driving gilt prices down), he can hedge his gilt holding by selling an E168 futures contract so that the profits on the future off-set the losses on the gilts.

I -

In-the-money
A call option which has a strike price below the market price of the underlying asset, or a put option which has a strike price above the asset price. The option would have a positive intrinsic value.

Index
A weighted or unweighted average of the prices of a group of shares, commodities or other instruments. The jse indices are weighted according to market capitalisation and exclude 20% of the smallest quoted companies in the respective sector.

Indi future
Safex's industrial index future, based on the jse's industrial index.

Initial margin-1
The security deposit that must be placed with the exchange when trading in future or option contracts listed on safex. This deposit must be placed in terms of the net position in each of the different instruments traded on the exchange.

Initial margin-2
All CFDs as well as Financial Spreads require only a proportion of the total transaction size to take out the position. For example you may only require £1,000 to take out a £10,000 position in a share. This would be known as a 10% margin requirement / NTR or 10 times gearing. The smaller the margin requirement the more highly geared or leveraged the position would be.

Interest Rate Differential
Interest rate differentials are used to calculate the amount of financing you are credited or debited for holding a currency position overnight. It is calculated using the one day differentials for the two currencies concerned. Effectively, you receive the interest on the currency you have bought and pay interest on the currency you have sold, although the financing position/adjustment will be made in one currency.

J -

K -

L -

Last day to register (LDR)
This phrase is most commonly used in connection with dividends or interest paid on interest-bearing instruments. When a dividend is declared, the directors of the company announce the day on which the list of registered shareholders will be fixed for purposes of the dividend. Anyone holding a share on the ldr is eligible for the dividend; an investor who buys with settlement on or before ldr will receive the dividend, even if he sells the day after. Ldrs for bonds are published with the particulars of the bond and is currently one month before interest payment date. With the demobilising of scrip into a central depository and electronic settlements, it is possible that ldrs on future bond issues will be much closer to the interest payment date. Rights issues and bonus issues also have ldrs.

Level 2
Level 2 shows a further depth of insight as to how the price of a share is being made up. This is opposed to level 1 prices which only shows the current quote.

LIBOR
London Inter-Bank Offered Rate; is the bank rate at which banks offer to lend money to each other compiled by the British Bankers Association. This rate is the basis for calculating overnight financing charges for CFD and for instance Financial Spreads positions held overnight.

Limit orders
Limit orders are used to trade at a better than current market price. They can be used to either enter or exit a position.

Limited Risk Account
Limited Risk Accounts are designed for clients who have less appetite for risk. A limited risk account requires you to have sufficient funds deposited in your account to cover the maximum possible loss before you are able to trade. This is managed by placing a Guaranteed Stop Loss (for which you will be charged a premium). You choose where you want your trade to be closed should the market move against you and we guarantee that your bet will be closed at exactly this price, even if the market gaps the chosen level.

Long
Generally refered to as 'Going Long' - you take a long position if you think the price of an instrument is going to rise in value.

Long position
A long position in any instrument is when the holder of the instrument is the owner or beneficial owner thereof.

M -

Market Capitalisation (Cap)
The total value of a company's stock, to be calculated by multiplying the number of shares with the share price. Shares with a very low market capitalisation may not be tradable as CFDs or spread bets or only tradable over the phone. Shares with very high market capitalisation may benefit from decreased margin requirements due to their blue chip status. Also: the value that the market place ascribes to a listed company. This can be calculated by multiplying the number of shares in issue by their current market price.

Margin Call
If a CFD or spread bet moves into a loss-making position and you don’t have the minimum funds required to hold the position, then the broker can make what is known as a ‘margin call’. This is where you would be asked to deposit additional funds to ensure that the position remains solvent and is not closed by the broker.

Mark-to-Market
The process of recalculating the net profit or loss on each client's open positions at the end of each trading day (or more often if required). This will result in the open position being shown at market value. Funds are withdrawn from or deposited into the client's margin account so that the balance reflects his net profit or loss. The system ensures that the overall liabilities of market participants are kept to a minimum. The daily mark-to-market price (mtm) is set by the exchange each evening as the mid-point of the best bid and the best offer at close of trade.

Market maker
An exchange member who is always willing to make a price and thereby helps to create a liquid market. Market makers trade as principals (for their own account), and quote two-way prices in order to try and maintain a balanced book.

Market rate
The rate at which interest-rate securities trade in the secondary market at a specific stage.

Maturity date
The date on which a bond or debenture falls due for repayment. The term is also used interchangeably with expiry date to refer to the expiry date of an option.

Money market
The market for short term and very-short-term paper. The money market is not a physical marketplace, but a communications network which allows merchant banks, large corporations, the government, and the reserve bank to deal with one another and arrange lines of credit with one another.

Margin requirements
Also known as the Notional Trading Requirement, usually calculated as either a percentage of the position or a fixed factor multiplied by your stake.

Margined Instrument
An instrument which is margined requires only a proportion of the total transaction size to be deposited to initially take out the position e.g. if the margin rate was 10% and you took out a position for £10,000 then the broker would only require £1,000. Margined positions which go against you will lead to a margin call when you fall below the minimum margin requirement.

N - S

N -

Naked option
An option that has been sold by a writer who does not have a position in the cash market to cover the option.

Negotiable certificate of deposit (NCD)
An NCD is a fixed deposit receipt which is negotiable in the secondary market, which means that the holder thereof can sell it to a third party. Interest on ncds is usually paid six-monthly in arrears if the term exceeds one year, and on maturity if the term is less than one year. The price of ncds fluctuates, depending on the prevailing interest rate.

Nil paid letters (NPL)
A security which is temporarily listed on the stock exchange and which represents the right to take up shares of a certain company at a certain price on a certain date. Nil paid letters are the result of a rights issue to the existing shareholders (or debenture holders) of a company. A rights issue is a method of raising additional capital by offering existing shareholders the opportunity to take up more shares in the company, usually at a price that is well below the market price of the shares. Npls usually trade for a period of four weeks.

NTR (Notional Trading Requirements)
The deposit requirement in respect of each open bet on your account. When you place a trade you must have enough funds to cover the NTR applicable to that trade. NTR is sometimes known as Initial Margin. You must maintain the NTR deposit level above any profits/losses on your account.

O -

OCO orders (one cancels other)
This order types allows you to link a stop-loss order and a limit order to an open position. This is generally used to control possible losses with the stop-loss order and take possible profits with the limit order. If one of the orders is executed, the open position is closed and the remaining order is automatically cancelled.

Offer price
The price at which a market participant is willing to sell. The bid price and the offer price together make up the double in the futures market.

Open position
An open position in any instrument is when a short or a long position in an instrument is not hedged against price or interest-rate risk by using derivatives or opposite transactions.

Option
An option gives the holder the right but does not impose an obligation to buy (call) or sell (put) an underlying asset at a predetermined price at any point within a specified period of time. The writer is obliged to sell or buy if called upon to do so, and in return for shouldering this obligation receives a once-off-non-refundable payment known as a premium.

Out-of-the-money
An option which has a negative intrinsic value (i.e. For a call, where the strike price is above the market price, or vice versa for a put).

Overnight option
An option that is live from 4:00 p.m. And expires at 10:00 a.m. The following morning.

Over-the-counter (OTC)
This refers to any transaction which is made outside of a regulated and organised exchange. This means, inter alia, that due performance is not guaranteed beyond the means of the parties to the transaction, and that the transaction may be difficult to renegotiate in a secondary market. OTC deals are usually made over the telephone rather than over a counter.

OTC
CFDs and Financial Spreads are a type of Over the Counter (OTC) product. This is contrast to share dealing where you are trading directly on a recognised stock exchange.

P -

Par value
The price for which a share was first sold to the public. Normally, the market price quickly exceeds the par value as the company grows and makes profits. The objective of the par value is to enable the "asset base" of the company to be clearly established at its inception so that no illegal erosion of that base can take place.

Points
Specific to gilts or interest rate market trading, a basis point or a point is equal to one-hundredth of one percent. A move from 17,25% to 17,26% in the quoted ytm for the r153, for example, is a one basis point move. A change in the quotation from 17,250% to 17,255% (referred to as "seventeen point two five and a half") is half a basis pointmove. In the forex market, a basis point is equal to 0,0001 in the foreign exchange rate quotation.

Price/earnings ratio
The market price of a share divided by the earnings per share. This is the reciprocal of the earnings yield (eps/price). It is preferred to the e.y. By many investors because its relationship with price is straightforward rather than inverse: an "expensive" share has a high p/e but a low e.y.

Promissory note
This is defined by the bills of exchange act as an unconditional order in writing made by one person to another, signed by the maker, and engaging to pay on demand or at a fixed or determinable future time, a certain sum of money, to a specified person or his order or to bearer.

Put option
A put option gives the holder the right but does not impose an obligation to sell a specified asset (financial, physical, or notional) at a set price within a specified time period or on a specific date.

Q -

Quarterly Bets
Also known as a future or forward price, is derived from the current underlying market price, but adjusted for the cost of funding until the future date. Funding has two components financing and dividends. Also see Rolling Bets.

Quote
The current "spread" relating the bid and the ask for a security. The bid is the highest price at which someone is willing to buy a security. The ask is the lowest price at which someone is willing to sell a security.

Quote Currency
The quote currency, or profit/loss currency, is the second currency in a pair. For example with EUR/USD, the quote currency is dollars. When you trade you choose how many dollars you are willing to risk for every tick movement.

R -

Repo rate
The rate at which a loan is granted when an asset is given as collateral or security for the loan, and where the asset will be repossessed by the borrower to redeem the loan.

Repo transaction
A transaction where a loan is granted and an asset is given as collateral or security for the loan. The borrower pays interest on the loan granted by the lender by taking the asset given as security or collateral back at redemption of the loan (known as the repossession of the asset) at a value determined by the rate on the loan, known as the repo rate. The grantor of the loan never becomes the owner of the asset given as security or collateral.

Redemption date
The date on which redeemable preference shares, debentures or loans will be redeemed by the company. These are really forms of long-term indebtedness, which clearly have to be paid back on pre-determined dates.

Rights issue
An offer of additional shares to existing shareholders, usually at a discount to the current market price. When a company wishes to raise additional capital, one of the ways it can do so is by offering more shares to its existing shareholders. Normally the right to buy these shares is represented by renounceable nil paid letters of allocation (npls) which entitle the holder to buy the shares at a certain price.

Rolling Bets
Based around the underlying share price to which a small spread is applied. Positions open at the end of each day are automatically rolled over into the following day. The existing position is closed at the end of day price and a new position opened at the same level. Also see quarterly bets.

S -

Scrip
Share market jargon for share certificates.

Screen market
A system of trading which relies on an electronic computer network to link market participants, in contrast to a trading floor where dealers physically congregate.

Sectors
A sector is a combination of shares within one industry e.g. banking. Trading sectors creates greater diversification than trading individual shares, although less than trading indices.

Share Dealing
Purchasing the underlying cash equities whether in a nominee account or by receiving certificates. CFDs have some similarities to share dealing, such as buying 10,000 shares is the same as 10,000 CFDs, although differ in other respects, such as being a margined instrument and holders not receiving the same shareholder perks that sharedealers will do, such as voting rights.

Settlement
The physical delivery of the payment and the instrument or underlying instrument between the buyer and seller.

Settlement date
The date on which a transaction is given effect and on which payment and delivery takes place. In the gilts market, for example, settlement takes place on the third business day after the trade. Share index futures are settled on 15 (or next business day) march, june, september, and december. On the jse transactions are settled on the seventh business day after the trade. This will soon change to 5 business days after the trade, and later to three.

Short
You take a short position if you think the price of an instrument is going to fall. The intention is to buy back the instrument at a later date at a lower price, although if you close the position at a higher price then you will lose money

Short position
A short position in an instrument is when the instrument is sold or an option is written without the seller/writer being the owner of that instrument or the holder of an opposite option.

Spot market
Any market in which goods change hands "on the spot". Traders in the spot market (or cash market) make transactions for immediate payment and delivery. In contrast to the futures market, where payment and delivery occur at a future date.

Strike price
The set price at which a call option holder has the right to buy the underlying asset, or at which a put option holder has the right to sell the underlying asset.

Spread betting
Spreadbetting is a tax free, cost effective alternative to traditional share trading. It allows you to speculate on the movement of stocks and shares without using a stockbroker, therefore you do not have to pay commission or fees. We make a spread around the live, underlying market price and you can bet on whether this market will rise or fall.

Stamp Duty
Government tax charged on the purchases of shares at the rate of 0.5% in the UK. As no underlying instrument is purchased with CFDs and spread bets, stamp duty does not apply. Tax laws can of course change.

Standard Account
With a Standard Account the amount that you deposit will determine the total size of any trade on the account and will not be considered as your ultimate financial liability. If your positions move against you, you may need to make a margin payment to maintain your position. This is because in addition to the initial margin required to create the position, you must also meet the full value of all running losses from your positions.

Stop orders
An order to buy/sell shares when the share price rises to or above/falls to or below a specified stop price. When buying, a Stop order is used to make an investment but only when an upward trend in the share price has been established. When selling, a Stop order is used as protection from a sudden fall in the share price or lock-in profits already made. We always recommend you place a stop order on an open position to help control your potential losses.

T - Z

T -

Tick
A tick is the smallest possible movement in an instrument, whether that be a quarter point movement on certain share price or a one point movement on a currency.

Touch Prices
Touch prices are the prices which are distributed by the exchange which the underlying instrument trades.

U -

Underlying asset
The asset that underlies a derivative instrument such as a futures or option contract. Futures and options are negotiable instruments in their own right, but their price depends on an underlying asset such as a commodity or share.

V -

Variation Margin
If your positions go against you and you fall beneath the NTR or margin requirement then you may need to pay additional funds into your account. This is known as variation margin and is requested by the broker through a margin call.

Volatility
Volatility represents the magnitude of the price of the underlying security's movements during a specific time period. Trading CFDs and spread bets in highly volatile instruments can lead to rapid gains and losses due to the gearing involved.

W -

X -

Y -

Yield-to-maturity (YTM)
The yield that an investor would get on an investment such as a bond, if the investor kept the investment to maturity. The yield-to-maturity (or yield-to-redemption) of a bond is the calculated yield taking into account (a) the present value of the principal at redemption, (b) the present value of the periodic coupon payments for the remaining life of the bond, and (c) the present value of interest earned on the coupon payments. Gilts are traded on the ytm, and the all-in price which has to be paid is worked out once a deal is concluded.

Z -

Zero-rated coupon bonds
Bonds that do not pay interest on the nominal amount of the instrument. These bonds are usually issued at a discount to the nominal value, similar to that of short-term discount instruments such as bas and treasury bills.

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