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32 Cards in this Set
- Front
- Back
Coupon
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The stated interest payment made on a bond.
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Face value
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The principal amount of a bond that is repaid a the end of the term. Also called par value.
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Coupon rate
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The annual coupon divded by the face value of a bond.
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Maturity
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The specified date on which the principal amount of a bond is paid.
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Yield to maturity (YTM)
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The rate required in the market on a bond.
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Current yield
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A bond's annual coupon divided by its price.
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Registered form
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The form of bond issue in which the register of the company records ownership of each bond; payment is made directly to the owner of the bond.
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Bearer form
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The form of a bond issue in which the bond is issued without record of the owner's name; payment is made to whomever holds the bond.
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Debenture
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An unsecured debt, usually with a maturity of 10 years of more.
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Note
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An unsecured debt, usually with a maturity under 10 years.
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Sinking fund
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An account managed by the bond trustee for early bond redemption.
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Call provision
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An agreement giving the corporation the option to repurchase a bond at a specified price prior to maturity.
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Call premium
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The amount by which the call price exceed the par value of a bond.
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Deferred call provision
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A call provision prohibiting the company from redeeming a bond prior to a certain date.
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Call-protected bond
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A bond that, during a certain period, cannot be redeemed by the issuer.
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Protective covenant
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A part of the indenture limiting certain actions that might be taken during the term of the loan, usually to protect the lender's interest.
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zero-coupon bond
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A bond that makes no coupon payments and is thus initially priced at a deep discount.
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Big price
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The price a dealer is willing to pay for a security.
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Asked price
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The price a dealer is willing to take for a security.
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Bid-ask spread
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The difference between the bid price and the asked price.
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Clean price
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The price of a bond net of accrued interest; this is the price that is typically quoted.
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Dirty price
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The price of a bond including accrued interest, also known as the full or invoice price.
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Real rates
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Interest rates or rates of return that have been adjusted for inflation.
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Nominal rates
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Interest rates or rates of return that have not been adjusted for inflation.
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Fisher effect
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The relationship between nominal returns, real returns, and inflation.
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Term structure of interest rates
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The relationship between nominal interest rates on default-free, pure discount securities and time to maturity; that is, the pure time value of money.
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Inflation premium
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The portion of a nominal interest rate that represents compensation for expected future inflation.
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Interest rate risk premium
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The compensation investors demand for bearing interest rate risk.
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Treasury yield curve
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A plot of the yields on Treasury notes and bonds relative to maturity.
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Default risk premium
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The portion of a nominal interest rate or bond yield that represents compensation for the possibility of default.
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Taxability premium
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The portion of a nominal interest rate or bond yield that represent compensation for unfavorable tax status.
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Liquidity premium
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The portion of a nominal interest rate or bond yield that represents compensation for lack of liquidity.
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