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22 Cards in this Set

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  • Back
a type of debt or long-term promissory note, issued by the borrower, promising to pay its holder a predet. and fixed amt of int per yr and the face value of bond at mat.
any unsecured long tern debt
subordinate debentures
have subordinate standing in case of insolvency...honored only after claims of secured debt and unsubordinate debentures have been satisfied
mortgage bond
bond secured by a lien on real property
bonds issued in a country different from the one in whose currency the bond is denominated
zero and low coupon bonds
bonds at a subordinate discount from their $1,000 face value with a zero or very low coupon rate
Junk bonds
high risk debt with ratings of BB or below by Moody's and S&P. also called high yield bonds.
Par Value of a Bond
face value, which is returned to the bondholder at maturity
coupon interest rate
percentage of the par value of the bond that will be paid out annually in the form of interest
convertible bond
may allow the investor to exchange the bond for a predetermined number of the firm's shares of common stock.
legal agreement between the firm issuing the bonds and the trustee who represents the bondholder
book value
value of an asset as shown on a firm's balance sheet
liquidation value
dollar sum that could be realized if an asset were sold individually and not as part of a going concern
preferred stock's similarities to common stock
1. it has no fixed maturity date 2. failure to pay dividends does not bring on bankruptcy
3. dividends are not deductible for tax purposes
cumulative feature
for pref. stock - requires all past, unpaid pref stock dividends to be paid before any cs divs are declared
protective provisions
allow for voting rights in the event of nonpayment of dividends, or they restrict pmt of cs divs if the pref stock sinking fund pmts are not met or if firm is fin difficulty
call provision
entitles a company to repurchase its pref stock from holders at stated prices over a given time period
sinking fund provision
requires the firm periodically to set aside an amt of money for the retirement of its preferred stock
common stock
a certificate that indicates ownership in a corporation
majority voting
each share of stock allows the shareholder one vote and each position on the board of directors is voted on separately
cumulative voting
each share of stock allows the shareholder a number of votes equal to the number of directors being elected
preemptive rights
entitles the common shareholder to maintain a proportionate share of ownership in the firm