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28 Cards in this Set
- Front
- Back
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Plain vanilla bonds
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Bonds issued with a relatively standard set of features (bullet bonds).
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Unsecured debt
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Bonds, notes, or other debt issued with no specific collateral pledged as security for the bond issue.
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Debentures
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Unsecured bonds issued by a corporation.
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Mortgage bond
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Deb secured with a property lien.
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Collateral trust bond
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Deb secured with financial collateral.
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Equipment trust certificate
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Shares in a trust with income from a lease contract.
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Indenture summary
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Description of the contractual terms of a new bond issued included in a bond’s prospectus.
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Prospectus
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Document prepared as part of a security offering detailing information about a company’s financial position, its operations, and investment plans.
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Senior debentures
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Bonds that have a higher claim on the firm’s assets than other bonds.
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Subordinated debentures
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Bonds that have a claim on the firm’s assets after those with a higher claim have been satisfied.
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Negative pledge clause
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Bond indenture provision that prohibits new debt from being issued with seniority over an existing issue.
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Bond refunding
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Process of calling an outstanding bond issue and refinancing it with a new bond issue.
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Put bonds
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Bonds that can be sold back to the issuer at a prespecified price on any of a sequence of prespecified dates.
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Convertible bonds
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Bonds that holders can exchange for common stock according to a prespecified conversion ratio.
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In-the-money bond
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- A convertible bond whose conversion value is greater than its call price.
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Term bonds
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Bonds issued with a single maturity date.
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Intrinsic bond value
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The price below which a convertible bond cannot fall, equal to the value of a comparable nonconvertible bond.
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Exchangeable bonds
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Bonds that can be converted into common stock shares of a company other than the issuer’s.
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Serial Bonds
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Bonds issued with a regular sequence of maturity dates.
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Sinking fund
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An account used to provide for scheduled redemptions of outstanding bonds.
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Protective covenants
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Restrictions in a bond indenture designed to protect bondholders.
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Event risk
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The possibility that the issuing corporation will experience a significant change in its bond credit quality.
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Private placement
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A new bond issued sold to one or more parties in private transactions not available to the public
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Preferred stock
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A security with a claim to dividend payments that is senior to common stock.
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Adjustable rate bonds
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Securities that pay coupons that change according to a prespecified rule.
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Credit rating
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An assessment of the credit quality of a bond issue based on the issuer’s financial condition
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Prudent investment guidelines
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Restrictions on investment portfolios stipulating that securities purchased must meet a certain level of safety.
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High-yield bonds
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Bonds with a speculative credit rating that is offset by a yield premium offered to compensate for higher credit risk.
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