Issuer - is the borrower that issues the bond to raise money from investors. Issuers in the Australian bond market include the Federal Government, semi government authorities, large institutions or companies with acceptable credit ratings.

Coupon - is rate of interest paid on the bond. Coupons can be paid annually, semi-annually or quarterly. The coupon rate can be fixed or floating for the term of the security. If it is a floating rate then it is likely that it will be linked to a benchmark such as the 90 day bank bill rate or to the consumer price index. The coupon rate is set by the issuer based on a number of factors including prevailing market interest rates and its credit rating.

Maturity date - the date of expiry of the bond when the nominal value will be repaid to the bondholder or investor by the issuer.

Face value - is the amount repaid to the bondholder on the maturity of the bond usually in $100's for example, $10,000, $500,000 or $1 million.

Purchase price - is the amount that a bondholder pays to purchase the bond. Price can be quoted on a "clean" basis meaning that this is the capital price of the bond, or it can be quoted on a "dirty" basis meaning that it includes both the capital price plus the accrued interest. Be sure that you are fully aware how the bond is being quoted to you if investing in bonds.

Discount - the capital price can be at a "discount" meaning that it is less than $100, for example, $98. Where bonds have been purchased at discount, say for example $98, the bondholder will make a capital gain of $2 on the maturity of the bond because they will be repaid the nominal value which is $100. An investor investing $10,000 in bonds is in fact purchasing 100 bonds with a face value of $100.

Premium - the capital price can be at a premium meaning that it is above $100, for example, $102. If the bond has been bought at a premium, say $102, then the investor will make a capital loss of $2 on maturity because he or she will only receive $100 per bond.

Yield - This is a measure of the return that a bondholder makes on a bond. The most common yield measure is "yield to maturity" which measures the yield on the bond assuming that the bond is held to maturity. It is a very useful indicator of value because it allows for direct comparison between different types of securities with various maturities and credit risk.

Security - in some cases, the borrower will also offer a security for the borrowing such as a guarantee or some form of collateral. This is referred to as a "secured" borrowing. Of course, secured borrowings will be more attractive to lenders but less attractive to the borrowers.