Lottery Bond
A bond issued in the U.S. and U.K. with a rate of return dependent upon a lottery style payout.
Investopedia Commentary
The lottery payout structure involves a method of random draws. Every issued bond is similar to a lottery ticket with an equal opportunity at winning payments in monthly draws for cash prizes. These prizes are generally larger than coupon payments on regular payout bonds. However, there is always the possibility that a bondholder will not win any of the cash prizes during the life of the bond.
These bonds are now issued as premium bonds, but be warned, sometimes these bonds are used as scams for unwitting investors. The only corporation permitted to sell these bonds in the U.S. is National Savings.
Related Links
Bond Basics Tutorial
See also: Bond, Coupon, Interest Rate, Principal
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