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34 Cards in this Set
- Front
- Back
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Bond
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A long-term debt instrument.
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Treasury Bonds
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Bonds issued by the federal government, sometimes referred to as government bonds.
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Corporate Bonds
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Bonds issued by corporations
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Municipal Bonds
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Bonds issued by state and local governments.
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Foreign Bonds
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Bonds issued by either foreign governments or foreign corporations.
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Par Value
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The face value of a bond.
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Coupon Payment
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The specified number of dollars of interest paid each year.
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Coupon Interest Rate
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The stated annual interest rate on a bond.
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Floating-Rate Bond
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A bond whose interest rate fluctuates with shifts in the general level of interest rates.
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Zero Coupon Bond
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A bond that pays no annual interest but is sold at a discount below par, thus providing compensation to investors in the form of capital appreciation.
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Original Issue Discount (OID) Bond
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Any bond originally offered at a price below its par value.
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Maturity Date
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A specified date on which the par value of a bond must be repaid.
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Original Maturity
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The number of years to maturity at the time a bond is issued.
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Cell Provision
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A provision in a bond contract that gives the issuer the right to redeem the bonds under soecified terms prior to the normal maturity date.
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Sinking Fund Provision
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A provision in a bond contract that requires the issuer to retire a portion of the bond issue each year
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Convertible Bond
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A bond that is exchangeable, at the option of the holder, for the isuing firm's common stock.
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Warrant
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A long-term option to buy a stated number of shares of common stock at a specified price.
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Putable Bond
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A bond with provisions that allow its investors to sell it back to the company prior to the maturity at a prearranged price.
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Income Bond
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A bond that pays interest only if it is earned.
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Indexed (Purchasing Power) Bond
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A bond that has interest payments based on an inflation index so as to protect the holder from inflation.
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Discount Bond
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A bond that sells below its par value; occurs whenever the going rate of interest is above the coupon rate.
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Premium Bond
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A bond that sells above its par value; ooccurs whenever the going rate of interest is below the coupon rate.
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Yield to Maturity (YTM)
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The rate of return earned on a bond if it is held to maturity.
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Yield to Call (YTC)
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The rate of return earned on a bond if is called before its maturity date.
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Current Yield
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The annual interest payment on a bond divided by the bond's current price.
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Interest Rate (Price) Risk
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The risk of a decline in a bond's price due to an increase in interest rates.
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Reinvestment Rate Risk
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The risk that a decline in interest rates will lead to a decline in income from a bond portfolio.
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Investment Horizon
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The period of time an investor plans to hold a particular investment.
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Mortgage Bond
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A bond backed by fixed assets. First mortgage bonds are senior in priority to claims of second mortgage bond.
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Indenture
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A formal agreement between the issuer and the bondholders.
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Debenture
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A long-term bond that is not secured by a mortgage on specific property.
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Subordinated Debenture
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A bond having a claim onnassets only after the senior debt has been paid off in the event of liquidation.
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Investment-Grade Bonds
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Bonds rated triple-B or higher; many banks and other institutional investors are permitted by law to hold only investment-grade bonds.
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Junk Bonds
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A high-risk, high yield bond.
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