Baby Bonds: Bonds whose face value is usually $100 or less. Balloon Maturity: Describes a bond issue in which bonds that come due close to the maturity date of the issue have a substantially larger value than those bonds that came due earlier in the issue. Very often, a provision is made for the redemption of part or all of these bonds by purchase or call prior to maturity. Basis Book: A book of mathematical tables used to convert yield-to-maturity to the equivalent dollar prices at different rates of interest.
Basis Point: One-hundredth of 1 percent. One hundred basis points equals 1 percent.
Basis Price: Price expressed in yield to maturity or the annual rate of return on the investment.
Bearer Form: A negotiable instrument format that has no registered owner. The instrument is therefore payable to the person who has physical possession of the security.
Bearer Security: A security that does not have the name of the owner or owner’s agent registered on the books of the issuer. This allows the proceeds (principal as well as interest) to be paid to the current holder of the security. Bear Market: A period of generally pessimistic attitudes and declining market prices. Compare Bull Market.
Below the Market: A price below the current market price for a particular security.
Best-Efforts Basis: Where a securities dealer does not underwrite a new issue but sells it on the basis of what can be sold. In the money market, this usually refers to a firm order to buy or sell a given amount of securities or currency at the best price that can be found over a given period of time. It can also refer to a flexible amount up to a certain limit at a given rate. Bid and Asked/Bid and Offer: The price at which an owner offers to sell (asked or offer) and the price at which a prospective buyer offers to buy (bid). It is often referred to as a quotation or a quote. The difference between the two is called the spread.
Big Board: The New York Stock Exchange (NYSE).
Blanket Bond: A bond secured by the general assets of a company, as opposed to an unsecured bond or one secured by specific assets. See Bond. Block: A large number of securities dealt with as a unit.
Blue-Chip Stocks: The securities of major companies known nationally for their record of earnings, dividend payments, and general price stability. This term denotes high esteem on the part of investors.
Blue List: A trade publication, published each business day, that shows current municipal bond offerings by banks and municipal bond dealers throughout the country.
Blue-Sky Laws: Laws enacted by states to regulate the issuance and sale of securities.
Bond: An interest-bearing security issued by a corporation, government, governmental agency, or other body. It is a form of debt with an interest rate, maturity, and face value, and it is usually secured by specific assets. Most bonds have a maturity of greater than one year and generally pay interest semiannually. See Debenture.
Bond Anticipation Notes (BANS): Short-term notes sold by states and municipalities to obtain interim financing for projects that will eventually be financed by the sale of bonds.
Bond Averages: The average prices of certain bonds over a specific period. They usually reflect trends in the bond market.
Bond Buyer: A trade publication that describes upcoming municipal bond sales, posts the results of those sales, and carries news items of special interest to the municipal bond industry.
Bond Buyer Index: An index published weekly by the Bond Buyer to indicate the level of longterm municipal bond yields.
Bond Discount: The difference between a bond’s face value and a selling price, when the selling price is lower than the face value.
Bond Power: A “power of attorney” used in connection with the sale and transfer of registered bonds. It is necessary to obtain bond powers whenever registered bonds are pledged as collateral. See Power of Attorney.
Bond Rating: The classification of a bond’s investment quality. See Rating.
Bond Resolution: A legal order or contract by a governmental unit to authorize a bond issue. A bond resolution carefully details the rights of the bondholders and the obligations of the issuer.
Book-Entry Securities: Securities that are not represented by engraved certificates but are maintained in computerized records of the issuer.
Book Value: The amount at which a security is carried on the books of the holder or issuer. The book value is often the original cost of the security plus or minus amortization and accretion; it may differ significantly from the market value.
Broker: An intermediary who brings buyers and sellers together and handles their orders, generally charging a commission for this service. In contrast to a principal or a dealer, the broker does not own or take a position in securities.
Broker or Dealer Loans: Loans made to securities brokers and dealers, mainly by money center banks and secured by securities. These are usually overnight call loans to finance stock inventories, underwriting activities, or brokers’ credit. See Call Loans.
Bull Market: A period of generally optimistic attitudes and increasing market prices. Compare Bear Market.
Buyer’s Market: A market in which supply is greater than demand, giving buyers an advantage.
Although the information in this brochure has been obtained from sources Bank of America believes to be reliable, we do not guarantee its accuracy or completeness, and such information may be summarized or condensed. This brochure is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.