Mortgage Information | Student Loans | Auto Loans
Mortgage and Loan Terms Glossary | Doc Loan Home
Free Loan Advice and Financial Information  
Browse by Letter

Loan and Mortgage Terms Glossary

Step-Up Bond:

A bond that pays the investor an initial above-market yield for a short, noncall period and then, if not called, steps up to a predetermined higher coupon rate. The bond may include a series of step-up rates and is callable at every step-up date. For example, the initial rate may be 5 percent, increasing to 6 percent after two years, and 7 percent after four years. The bond is designed to protect the issuer against falling market interest rates. If interest rates fall, the issuer can call the bond. If interest rates rise to levels equal to or higher than the step-up rate, the issuer would likely not call the bond. A step-up bond is a type of structured note.

Contact | Advertising Information | Other Resources

Copyright 2002-2006