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Bonds & Fixed Income

2 terms


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Bonds & Fixed Income

Term Premium

The extra yield lenders require for holding a longer-maturity bond rather than rolling short-maturity ones.

Term Premium = Long-Maturity Yield - Average Expected Short-Term Rate over the same period bps
Bonds & Fixed Income

Treasury Bill

A short-term government security issued at a discount to face value and redeemed at par, with no coupon.

Yield = [(Face Value - Price) / Price] x (365 / Days to Maturity) x 100 %