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14 Cards in this Set
- Front
- Back
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HOW DOES INVESTORS EARN MONEY BY BUYING BONDS AT A DISCOUNT?
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they get interest from the bonds that they buy
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WHAT ARE STANDARDS & POORS AND MOODY RATINGS BASED ON?
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issues ability to make future interest payments & to repay the principle when bond matures
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WHAT ADVANTAGES DO BONDS OFFER TO FIRMS THAT ISSUE THEM?
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once the bond is sold the rate will stay the same & bond holders do not own a part of the company
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WHAT DISADVANTAGES DO BONDS PRESENT FOR THE ISSUE?
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company must make fixed interest payments even in bad years, if they do not maintain financial health bonds will downgrade
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wHAT TYPES OF GOVERNMENT BONDS ARE AVAILABLE TO INVESTORS?
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savings bond, treasury bonds, corporate bonds, junk bonds, municiple bonds
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WHAT OFFERS GREATER TAX ADVANTAGES?
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municiple, government has the power to tax
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WHAT IS THE INVESTMENT ADVANTAGE OF MONEY MARKET MUTUAL FUNDS OVER CDS AND SAVINGS ACCOUNTS?
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INVESTORS RECIEVE A HIGHER INTEREST THAN THEY WOULD IF WITH A SAVINGS ACCOUNT
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IN FINANCIAL ASSET MARKETS, HOW DO CAPITAL MARKETS DIFFER FROM MONEY MARKET?
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money is lent for a shorter period of time then capital markets
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what is the investment disadvantage of money market mutual funds OVER CDS AND SAVINGS ACCOUNTS?
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not covered by FDIC insurance
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HOW DO PRIMARY MARKETS DIFFER FROM SECONDARY MARKETS?
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financial assist are redeemed by original holder, they can be resold in the secondary market
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MATURITY
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the time of which a payment to a bondholder is due
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CORPORATE BOND
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a bond that a corp, issues to raise money and expand the business
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JUNK BOND
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lower rated- rated potentially higher paying bond
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COUPON RATE
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interest rate , that a bond issuer will pay to a bond holder
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