Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
33 Cards in this Set
- Front
- Back
|
coupon
|
state interest payment made on a bond
|
|
|
face value
|
the principal amount of a bond that is repaid at the end of the term (par value )
|
|
|
coupon rate
|
the annual coupon divided by the face value of the bond
|
|
|
maturity
|
date on which the principal amount of a bond is paid
|
|
|
yield to maturity (YTM)
|
the rate required in the market on a bond
|
|
|
current yield
|
a bonds annual coupon divided by its price
|
|
|
indenture
|
the written agreement between the corporation and the lender detailing the terms of the debt issue
|
|
|
registered form
|
the form of bond issue in which the registrar of the company records ownership of each bond; payment is made directly to the owner of record
|
|
|
bearer form
|
the form of bond issue in which the bond is issued without record of the owner's name; payment is made to whomever holds the bond
|
|
|
debenture
|
an unsecured debt usually with a maturity of 10 years or more
|
|
|
note
|
an unsecured debt, usually with a maturity under 10 years
|
|
|
sinking fund
|
an account managed by the bond trustee for early bond redemption
|
|
|
call provision
|
an agreement giving the corporation the option to repurchase the bond at a specific price prior to maturity
|
|
|
call premium
|
the amount by which the call price exceeds the par value of the bond
|
|
|
deferred call provision
|
a call provision prohibiting the company from redeeming the bond prior to a certain date
|
|
|
call protected bond
|
a bond that currently cannot be redeemed by the issuer
|
|
|
protective covenant
|
a part of the indenture limiting certain actions that might be taken during the term of the loan, usually to protect the lender
|
|
|
zero coupon bond
|
a bond that makes no coupon payments, and thus is initially priced at a deep discount
|
|
|
bid price
|
the price a dealer is willing to pay for a security
|
|
|
asked price
|
the price a dealer is willing to take for a security
|
|
|
bid-ask spread
|
the difference between the bid price and the asked price
|
|
|
clean price
|
the price of a bond net of accrued interest; this is the price that is typically quoted
|
|
|
dirty price
|
the price of a bond including accrued interest also known as the full or invoice price. this is the price the buyer actually pays
|
|
|
real rates
|
interest rates or rates of return that have been adjusted for inflation
|
|
|
nominal rates
|
interest rates or rates of return that have not been adjusted for inflation
|
|
|
fischer effect
|
the relationship between nominal returns, real returns, and inflation
|
|
|
term structure of interest rates
|
the relationship between nominal interest rates on default- free pure discount securities and time to maturity; that is the pure time value of money
|
|
|
inflation premium
|
the portion of a nominal interest rate that represents compensation for expected future inflation
|
|
|
interest rate risk premium
|
the compensation investors demand for bearing interest rate risk
|
|
|
treasury yield curve
|
a plot of the yields on Treasury notes and bonds relative to maturity
|
|
|
default risk premium
|
the portion of a nominal interest rate or bond yield that represents compensation for the possibility of default
|
|
|
taxability premium
|
the portion of a nominal interest rate or bond yield that represents compensation for unfavorable tax status
|
|
|
liquidity premium
|
the portion of a nominal interest rate or bond yield that represents compensation for lack of liquidity
|
