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;
35 Cards in this Set
- Front
- Back
|
bond |
A long-term debt instrument |
|
|
Treasury bond |
Bonds issued by the federal government, sometimes with her to as government bonds |
|
|
Corporate bonds |
Bonds issued by corporations |
|
|
Municipal bonds |
Bonds issued by state and local governments |
|
|
Foreign bonds |
Bonds issued by foreign governments or by foreign corporations |
|
|
Par value |
The face value of a bond |
|
|
Coupon payment |
The specified number of dollars of interest paid each year |
|
|
Coupon interest rate |
The stated annual interest rate on a bond |
|
|
Fixed rate bonds |
Bounces interest rate is fixed for their entire life |
|
|
Floating rate bonds |
Find whose interest rate fluctuates with shifts in the general level of interest rates |
|
|
Zero coupon bonds |
Combat pay no annual interest but are sold at a discount below par, thus compensating investors in the form of capital appreciation |
|
|
Original issue discount bond |
Any bond originally offered at a price below its par value |
|
|
Maturity date |
A specified date on which the par value of a bond must be repaid |
|
|
Original maturity |
The number of years to mature at a time a bond is issued |
|
|
Call provision |
A provision on a bond contract that gives the issuer the right to redeem the bonds under specified terms prior to the normal maturity date |
|
|
Sinking fund provisions |
A provision in a bond contract that requires the issuer to retire a portion of the bond issue each year |
|
|
Convertible bonds |
Bands that are exchangeable at the option of the holder for the issuing firm's common stock |
|
|
Warrants |
Long term options to buy a stated number of shares of common stock at a specified price |
|
|
Putable bonds |
Bonds with the provision that allows the investors to sell them back to the company prior to the maturity at a pre-arranged price |
|
|
income bond |
A bond that pays interest only if it is earned |
|
|
Indexed bond or purchasing power bond |
The band that has interest payments based on an inflation index so as to protect the holder from inflation |
|
|
Discount bond |
A bond that sells below its par value. this occurs whenever the going rate of interest is above the coupon rate |
|
|
Premium bond |
A bond that sells above its par value. This occurs whenever the going rate of interest is below the coupon rate |
|
|
Yield to maturity (YTM) |
The rate of return earned on a bond if it is held to maturity |
|
|
Yield to call (YTC) |
The rate of return earned on a bond when it is called before its maturity date |
|
|
Price risk or interest rate risk |
The risk of a decline in a bond price due to an increase in interest rates |
|
|
Reinvestment risk |
The risk that a decline in interest rates will lead to a decline in income from a bond portfolio |
|
|
Investment horizon |
The period of time an investor plans to hold a particular investment |
|
|
Duration |
The weighted average of the time it takes to receive each of the bonds cash flows |
|
|
Mortgage bond |
A bond backed by fixed assets. first mortgage bonds are senior in priority to claims of second mortgage bonds |
|
|
Indenture |
A formal agreement between the issuer and the bond holders |
|
|
Debenture |
A long term bond that is not secured by a mortgage on specific property |
|
|
Subordinated Debentures |
Bonds having a claim on assets only after the senior dabt has been paid in full in the event of liquidation |
|
|
Investment grade bonds |
bonds rated triple B or higher. many banks and other institutional investors are permitted by law to hold only investment grade bonds |
|
|
Junk bonds |
High risk high yield bonds |
