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21 Cards in this Set
- Front
- Back
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what is a corporate bond?
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A corpo-
ration’s written pledge to repay a specified amount of money with interest. |
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what is face value ?
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The dollar
amount the bondholder will receive at the bond’s maturity. |
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what is the maturity date For a corporate bond?
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the date
on which the corporation is to repay the borrowed money. |
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what is a bond indenture?
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A legal
document that details all of the conditions relating to a bond issue. |
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what is a trustee?
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A financially
independent firm that acts as the bondholders’ representative. |
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what is a debenture?
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A bond that
is backed only by the reputation of the issuing corporation. |
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what is a mortgage bond?
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A cor-
porate bond secured by various assets of the issu- ing firm. |
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what is a subordinated debenture?
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An unsecured bond that
gives bondholders a claim secondary to that of other designated bondholders with respect to interest payments, repayment, and assets. |
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what is a convertible bond?
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A bond
that can be exchanged, at the owner’s option, for a specified number of shares of the corporation’s common stock. |
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what is a call feature ?
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A feature that
allows the corporation to call in or buy outstand- ing bonds from current bondholders before the maturity date. |
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what is a sinking fund?
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A fund to
which annual or semi- annual deposits are made for the purpose of redeeming a bond issue |
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what are serial bonds?
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Bonds of a
single issue that mature on different dates. |
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what is a registered bond ?
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A bond
that is registered in the owner’s name by the issu- ing company. |
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what is a bearer bond ?
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A bond that
is not registered in the investor’s name. |
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what is a zero-coupon bond ?
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A
bond that is sold at a price far below its face value, makes no annual or semi- annual interest payments, and is redeemed for its face value at maturity |
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what is a bond ladder ?
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A strategy
where investors divide their investment dollars among bonds that mature at regular intervals in order to balance risk and return. |
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what is a municipal bond?
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A debt
security issued by a state or local government. |
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what is a general obligation bond?
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A bond backed by
the full faith, credit, and unlimited taxing power of the government that issued it. |
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what is a revenue bond ?
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A bond
that is repaid from the income generated by the project it is designed to finance. |
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what is a yield?
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The rate of return
earned by an investor who holds a bond for a stated period of time. |
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what is the yield to maturity?
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A yield
calculation that takes into account the relationship among a bond’s maturity value, the time to matu- rity, the current price, and the dollar amount of interest. |
