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28 Cards in this Set
- Front
- Back
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Treasury Bills (T-Bills) |
Discounted debt instruments issued by the U.S. Government. Very Low Risk. |
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Repurchase Agreements |
An arrangement by which one firm sells some of its financial assets to another firm with a promise to repurchase the securities at a set price. Low Risk. |
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Federal Funds |
Overnight loans from one bank to another bank. Low Risk. |
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Banker's Acceptance |
A form of debt issued by a bank that obligates the bank to pay a specified amount at some future date. Low Risk. |
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Commercial Paper |
A discounted instrument that is a type of promissory note, or legal IOU, issued by large, financially sound firms. |
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Certificate of Deposit (CD) |
An interest earning time deposit at a bank or other financial intermediary. |
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Eurodollar Deposit |
A deposit in a foreign bank that is denominated in U.S. dollars. |
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Money Market Mutual Funds |
Pools of funds managed by investment companies that are primarily invested in short-term financial assets. |
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Term Loans |
A loan, generally obtained from a bank or insurance company, on which the borrower agrees to make a series of payments consisting of interest and principal. |
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Bonds |
Long-term debt instrument, usually with a face value of $1,000, that accumulates interest until it reaches maturity. |
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Coupon Rate |
Interest paid on a bond or other debt instrument based on a percentage of its face value. |
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Government Bond |
Debt Issued by the federal government or by a state or local government. |
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Municipal Bond |
A bond issued by a state or local government. |
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Revenue Bond |
Proceeds from these bonds are used to fund projects that generate revenues, which are used to make interest payments and repay the principle. |
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General Obligation Bond |
A municipal bond that is backed by the local governments ability to impose taxes. |
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Corporate Bonds |
Long-term debt instruments that are issued by large corporations, and usually have a maturity of 20-30 years. |
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Mortgage Bond |
A bond where corporations pledge their fixed assets as collateral. |
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Debentures |
Long-term bonds that are not secured by a mortgage on a specific property. |
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Subordinated debenture |
A bond that ranks below other bonds, or is inferior to other debt in respect to claims on cash distributions made by the firm. |
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Income Bond |
A bond that pays interest to the holder only if the interest is earned by the firm. |
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Putable Bond. |
A bond that can be redeemed at the bondholders option. |
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Indexed (Purchasing Power) Bond |
A bond that has interest payments based on an inflation index to protect the holder from inflation. |
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Floating Rate Bond |
A bond whose interest rate fluctuates with shifts in the general level of interest rates. |
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Zero Coupon Bond |
A bond that pays out 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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Junk Bond |
A high risk high yield bond used to finance mergers, leveraged buyouts, and troubled companies. |
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Call Provisions |
A provision in a bond contract that fives the issuer the right to redeem the bonds under specified terms prior to the normal maturity date. |
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Sinking Fund |
A required annual payment designed to pay off or repurchase a bond or a preferred stock |
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Conversion Feature |
A feature in some bonds that permits bondholders to exchange their investment for a fixed number of shares of common stock. |
