Bunny Bond

A bunny bond gives the investor the opportunity to, um...hop around and reinvest their coupon payment from one bond into additional bonds with the same coupon and maturity date.

And what exactly is a coupon payment? It’s the annual interest that the bondholder receives until the bond matures.

Also known as a “multiplier bond,” a bunny bond can help protect against the possibility that interest rates will drop in the future. Unless you have a bunny bond, you would have to reinvest your coupons at a lower interest rate. With the bunny, you can reinvest your coupon interest back into the bond you are currently holding at the current rate. But just like a zero-coupon bond, you won’t receive any interest payments until it matures.

Bunny...anything...think: Hops up and down but doesn't really commit to a given status. See Trading Sardine for the ocean-based version of the same term.