2.1.4 - BOND CERTIFICATE

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Bonds were traditionally issued as what?

As certificates. Evidence of ownership, in essence, an IOU.

What denominations are registered bonds available in?

Available in $1000 denominations or multiples of $5000 up to $100,000 per certificate.

Which of the following best describes book entry? A) The transfer of ownership is entered only on the books of the buyer. B) The transfer of ownership is entered on the books of the issuer or the issuer's transfer agent. C) The transfer of ownership is entered on the books of the clearing agency. D) The transfer of ownership is entered on the books of the SRO.

B) The transfer of ownership is entered on the books of the issuer or the issuer's transfer agent. For book-entry ownership, transfers of ownership are accounting functions in the records of the issuer or the issuer's transfer agent. Reference: 2.1.4.4 in the License Exam Manual

What are book-entry registered bonds?

Book-entry bond owners do not receive certificates. Rather, the transfer agent maintains the security's ownership records.

What is a Coupon (Bearer) bond?

Coupon bonds are not registered, so whoever possesses them can collect interest on, sell, or redeem the bonds. Interest coupons are attached to bearer bonds and holders collect interest by clipping the coupons and delivering them to an issuers paying agent.

All of the following will affect the marketability of a block of corporate bonds EXCEPT: A) rating. B) maturity. C) block size. D) bond denominations.

D) bond denominations. Block size is a key factor. Maturity is also important-shorter maturities tend to be more marketable than longer maturities. Also, the higher the rating, the more marketable the block. Bond denominations are not relevant. Reference: 2.1.4.5 in the License Exam Manual

All bonds contain basic information, such as?

1. Name of issuer 2. Interest rate and payment date 3. Maturity date 4. Call features 5. Principal Amount 6. CUSIP # for identification 7. Dated date - date that interest begins to accrue 8. Reference to the bond indenture

How many ways can a bond be registered? What are they?

A bond can be registered in 3 ways. Fully Registered, Registered as Principal Only, and Book-Entry

New bonds are only issued in what forms?

Fully registered and book-entry forms.

What denominations are bearer bonds issued in?

Only $1000 and $5000

What is a registered as to principal only bond?

Principal-only registered bonds have the owner's name printed on the certificate, but the coupons are in bearer form.

What is a fully registered bond?

When bonds are registered as to both principal and interest.


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