Vanilla bond意思
"Vanilla bond" is a term used in finance to describe a conventional or plain-vanilla bond, which is the most basic form of a bond. These bonds are characterized by their simplicity and lack of exotic features or complex structures. Vanilla bonds are issued by governments, corporations, or other entities to raise capital and typically pay a fixed or floating interest rate over a specified period of time. At the end of the term, the bond issuer repays the face value of the bond to the holder.
Vanilla bonds are in contrast to more complex types of bonds, such as:
- Callable bonds, which allow the issuer to redeem the bond before the maturity date.
- Puttable bonds, which allow the bondholder to sell the bond back to the issuer before maturity.
- Convertible bonds, which can be converted into shares of the issuer's stock.
- Inflation-linked bonds, whose principal and/or interest payments are adjusted for inflation.
- Zero-coupon bonds, which do not pay periodic interest but are issued at a discount and mature at full face value.
Vanilla bonds are often considered to be low-risk, stable investments, and they play a significant role in the fixed-income market. They are commonly used by investors for portfolio diversification and to provide a steady stream of income.