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  • February 21, 2021
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Notional Bond

A standardized bond (in terms of its coupon and maturity) that is used as the basis for bond futures contracts. A given bond market would have its own standard contract terms for notional bonds in addition to conversion factors (factors for adjusting the terms of non-standard bonds to the notional standard). For example, in an exchange-traded futures contract the so-called notional coupon is used for the purpose of preventing any market discontinuity (delivery and liquidity hardships) if bonds are not available for a specific coupon size.


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