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Meaning / Definition of

Self-supporting Bond

Categories: Bonds and Treasuries,

Bond sold to finance a project whose revenues will be used to pay off the interest and principal on that bond. Such bonds are generally issued by municipalities, who use the proceeds to finance various kinds of development projects. Self-supporting bonds are sometimes named after the specific kind of project that they are financing (for example, hospital revenue bond). Municipalities might opt for a revenue bond structure in cases where they have the power to levy charges on users of the projects, such as roads, airports, or hospitals. Since a self-supporting bond is supported by project-specific revenues as opposed to more secure general tax revenues, they are of slightly lower quality than general obligation bonds, and so they tend to have higher yields. However, self-supporting bonds issued by municipalities have a good track record, and are generally considered low risk, liquid investments provided they are backed up by viable projects. Thus, the most important factor to keep in mind when investing in such bonds is the revenue prospects of the project that is being financed by the bond. Like all municipal bonds, interest earned on the bonds is exempt from federal tax. In the case that the bond is bought by a resident of the state that issued the bond, the interest payments are also exempt from state tax. interest payments are further exempt from local tax>if they are bought by residents of the locality that issued the bond.

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Definition / Meaning of

Standard & Poor's Depositary Receipt (SPDR)

Categories: Finance,

When you buy SPDRs - pronounced spiders - you're buying shares in a unit investment trust (UIT) that owns a portfolio of stocks included in Standard & Poor's 500-stock index (s&p 500). a share is priced at about 1/10 the value of the s&p 500.Like an index mutual fund that tracks the s&p 500, SPDRs provide a way to diversify your investment portfolio without having to own shares in all the s&p 500 companies yourself. However, while the net asset value (NAV) of an index fund is set only once a day, at the end of trading, the price of SPDRs, which are listed on the american stock exchange (AMEX), changes throughout the day, reflecting the constant changes in the index. SPDRs, which are part of a category of investments known as exchange traded funds, can be sold short or bought on margin as stocks can.Each quarter you receive a distribution based on the dividends paid on the stocks in the underlying portfolio, after trust expenses are deducted. If you choose, you can reinvest those distributions to buy additional shares.

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