Definition of Workout Period
Workout period, also seen as reset period, is the time period in which temporary yield discrepancies between fixed income securities are adjusted.
Explanation of Workout Period
During the workout period, bond issuers and credit rating agencies outstanding fixed income issues and adjust any discrepancies in price or yield, in order to correct any inefficiencies in the market.
For example, if an investor believes that the yield spread between two bonds is too wide; their investment would be moved from the higher yielding bond to the lower yielding bond. If the investor has guessed the expected workout period correctly, the investor will gain from the yield adjustment.