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EmailWhat It Is:
The term "bear" refers to a person who has a negative outlook on the market.
How It Works/Example:
Investors generally fall into two mindsets: those with an optimistic outlook who foresee prosperity, called "bulls" and those with a pessimistic outlook who foresee decline, called "bears."
A bear will alter their portfolio strategy by liquidating securities they believe are going to lose value in the foreseeable future. A bull, on the other hand, believes securities will continue to rise and would continue to invest long in securities.
Depending on an investor's outlook, they could change from a bear to a bull or vice versa.
Why It Matters:
The markets can be affected by investor perceptions. The bear's drive to sell and the bull's drive to buy can affect the market depending on whether the bears outnumber the bulls or vice-versa.
A coupon bond, frequently referred to as a bearer bond, is a bond with a certificate that has small detachable coupons. The coupons entitle the holder to interest payments from the borrower. Coupon bonds are rare today because most bonds are not issued in certificate form; rather, they are registered electronically (although some bondholders still choose to hold paper certificates). Thus, these days the term coupon refers to the rate of interest on a bond rather than the physical nature of the certificate.
In the 1980s, some financial institutions began purchasing coupon bonds and selling the coupons as separate securities, called strips.
