FIN 357 Chapter 7
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Premium Bond
A bond that sells above its par value ( or sell above face value).
Discount Bond
A bond that sells below par value (or sells below face value).
Current Yield
A bond's annual coupon divided by its price.
Coupon Rate
The annual coupon divided by the face value of a bond.
Face Value or Par Value
The principal amount of a bond that is repaid at the end of the term
Yield to Maturity (YTM)
The rate required in the market on a bond.
Interest Rate Risk
The risk that arises for bond owners from fluctuating interest rates.
Maturity
The specified date on which the principal amount of a bond is paid.
Coupon
The stated interest payment made on a bond
Indenture
The written agreement between the corporation and the lender detailing the terms of the debt issue.
