Definitions Close (Outstanding Bonds)


Closing price of the bond last year. Bonds are bought and sold in the marketplace, but since their interest payment is fixed, the price of the bond fluctuates. A risk assessment is made for each firm, ranging from “AAA” to “D.” For each lower grade, investors expect an additional 0.5% yield. The simulation adjusts the closing price of the bond so that the yield reflects current interest rates and an appropriate risk.