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34 Cards in this Set

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  • Back
A long-term debt instrument.
Treasury Bonds
Bonds issued by the federal government, sometimes referred to as government bonds.
Corporate Bonds
Bonds issued by corporations
Municipal Bonds
Bonds issued by state and local governments.
Foreign Bonds
Bonds issued by either foreign governments or 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.
Floating-Rate Bond
A bond whose interest rate fluctuates with shifts in the general level of interest rates.
Zero Coupon Bond
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.
Original Issue Discount (OID) 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 maturity at the time a bond is issued.
Cell Provision
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.
Sinking Fund Provision
A provision in a bond contract that requires the issuer to retire a portion of the bond issue each year
Convertible Bond
A bond that is exchangeable, at the option of the holder, for the isuing firm's common stock.
A long-term option to buy a stated number of shares of common stock at a specified price.
Putable Bond
A bond with provisions that allow its investors to sell it back to the company prior to the maturity at a prearranged price.
Income Bond
A bond that pays interest only if it is earned.
Indexed (Purchasing Power) Bond
A bond 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; occurs whenever the going rate of interest is above the coupon rate.
Premium Bond
A bond that sells above its par value; ooccurs 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 if is called before its maturity date.
Current Yield
The annual interest payment on a bond divided by the bond's current price.
Interest Rate (Price) Risk
The risk of a decline in a bond's price due to an increase in interest rates.
Reinvestment Rate 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.
Mortgage Bond
A bond backed by fixed assets. First mortgage bonds are senior in priority to claims of second mortgage bond.
A formal agreement between the issuer and the bondholders.
A long-term bond that is not secured by a mortgage on specific property.
Subordinated Debenture
A bond having a claim onnassets only after the senior debt has been paid off 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
A high-risk, high yield bond.