Variable Principal Bond

From Open Risk Manual

Definition

Variable Principal Bond. Bond whose principal adjusts over time with changes in an index such as inflation or GDP

The principal on variable principal bonds adjusts line with an index such as inflation or GDP. For example, for a bond linked to the CPI, if Inflation rises two percent the principal increases by 2 percent. The coupon rate is typically fixed. The best-known example is TIPS or Treasury Inflation Protected Bonds, which are linked to the CPI. TIPs offer a real or inflation adjusted rate of return.

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This entry annotates a FIBO Ontology Class. FIBO is a trademark and the FIBO Ontology is copyright of the EDM Council, released under the MIT Open Source License. There is no guarantee that the content of this page will remain aligned with, or correctly interprets, the concepts covered by the FIBO ontology.