Our Glossary
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| Bearer Security (Cenný papír na majitele) | A security that is not registered by any particular name but pertaining to its current owner. These securities may change their owner by mere handover of the security (by a transfer in the Central Securities Depository Prague – CDCP). |
| Benchmark | An indicator which the performance of a portfolio is compared with. Benchmark is mostly one of the public indices, or their combination. The selection of the benchmark must correspond with the portfolio’s investment focus. |
| Benchmark Strategy | Investment strategy seeking better appreciation of funds than that reached by the market or the set benchmark |
| Blue Chip | An Anglo-Saxon term for shares of the largest and safest joint-stock companies traded at stock exchanges, which are characterised by high quality management, long existence, regular payment of dividends and sufficient liquidity in the market. |
| Bond | See Bonds (Dluhopisy) |
| Bond Fund | See Bond Funds |
| Bond Funds/Debenture Funds | Mutual funds, whose investment strategy is focused on bonds. Given the investment focus of these funds, the volatility of the share certificate prices and the investment risk are usually higher than in equity funds. The credit risk of bonds owned by the fund is reduced by spreading the portfolio among several issuers. |
| Bond Market | Part of the financial market in which short-term or long-term bonds (debentures) are traded. |
| Bonds | Bonds (also sometimes called debentures) are interest-bearing securities that represent an obligation of the issuer to repay at the agreed dates the interest (coupon) and the lent capital. The bond holder is the issuer’s creditor. Investors may obtain dual income – interest coupon and possibly profit from the difference in rates in the case of a favourable change in the bond price. There are a number of different types of bonds. According to the issuer, there are government, municipal or corporate bonds. According to the residence of the issuer, there are domestic and foreign bonds. In the Czech Republic, the issue conditions of most bonds are subject to the approval of the Czech National Bank. According to the issuers, there are public (government or state, municipalities,...), corporate (company) and mortgage bonds (certificates). The bonds are not associated with shareholder rights. According to the yield, there are fixed-rate bonds or floating-rate bonds referred to as floaters – their interest rate is adjusted at regular intervals, usually every six months based on the current value of the selected reference rate. The most important types of risks in bonds are the credit and interest rate risks (other things being equal, if the rates increase, the bond price falls and vice versa) with additional currency risk in bonds in foreign currency. |
| Bonds | See Bond |