Fixed Income

Spot Rate

Definition

What is Spot Rate?

The yield on a zero-coupon cash flow occurring at a specific future date.

Example in practice

The five-year spot rate discounts a single payment due in five years.

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A debt security through which an investor lends money to an issuer in return for promised payments.

The government, company, or organisation that creates and sells a security.

The principal amount stated on a bond and usually repaid at maturity.

A short-term government debt instrument usually issued at a discount and repaid at face value.

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