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21 Cards in this Set

  • Front
  • Back
At what issue amount does the corporation issuing bonds have to provide investors with an indenture ?

$10 Million

This is the name of the agreement between the bond issuer and the trustee who acts on behalf of the bond holders

Indenture

This type of indenture does not permit the corporation to issue additional bonds secured by the same claim on the same assets as the original issue

Close Ended Indenture

This type of indenture does permit the corporation to issue additional bonds secured by the same claim on the same assets as the original issue

Open-Ended Indenture

This type of bond is secured by the full faith and credit of an issuer and by a specific asset that the corporation owns

Secured Bond

This type of bond is secured only by the corporation's full faith and credit

Unsecured Bond

This type of secured bond is secured by a first or second mortgage on real property

Mortgage Bond

This type of bond is secured by a specific piece of equipment that is owned by a corporation and used in its business

Equipment Trust Certificates

This type of bond is secured by third-party securities owned by an issuer

Collateral Trust Bonds

From Highest to Lowest list the liquidation rites in the event of a bankruptcy

  1. Backed Wages
  2. Taxes
  3. Secured Creditors included secured bonds
  4. General Creditors, including debentures (ie unsecured bonds)
  5. Subordinate Creditors, including subordinate Debentures
  6. Preferred Stock Holders
  7. Common Stock Holders

What is a debenture?

An unsecured bond



What is a subordinated debenture?

A bond that is unsecured and that has a junior claim on the company assets compared to other outstanding bonds.

This type of bond has interest and principal payments that are guaranteed by another company, usually a parent.

Guaranteed Bonds

With this type of bond, the issuer promises to repay the principal amount at maturity, but promises to pay interest only if it has sufficient earnings

Income Bonds

This type of money market instrument is a short term, unsecured corporate debt, that typically matures within 270 days or less

Commercial Paper

This type of money market instrument is a promised future payment, or time draft, which is accepted and guaranteed by a bank and drawn on a deposit at the bank

Bankers Acceptance

This type of money market instrument is an agreement between a two dealers, where the first dealer agrees to sell securities to a second dealer, with the first dealer buying them back at a specified time and price in the future.

Repurchase Agreement or Repo

This type of money market instrument is an agreement where a dealer purchases securities and agrees to sell them back to another dealer at a specific date and price

Reverse Repo

This type of money market instrument is issued by banks and savings companies, and are time deposits carrying a fixed rate of interest, which mature after a specified period.

Negotiable CDs

What are some of the risks associated with Long Term CDs


  1. Limited Liquidity
  2. Potential loss of principal if sold prior to maturity
  3. Call features that limit capital appreciation
  4. FDIC insurance may not apply
  5. Unique features

This type of overnight borrowing between banks, that is usually done to allow a bank with a reserve deficit borrow money from a bank with a reserve surplus.

Fed Funds