Chapter 14: Bonds and Long Term Notes

bonds

A form of debt consisting of separable units that obligates the issuing corporation to repay a stated amount at a specified maturity date and pay interest between the issue date and maturity

callable

allows the issuing company to buy back, or call, outstanding bonds from the bondholders before their scheduled maturity date.

mortgage bond

backed by a lien on specified real estate owned by the issuer

debenture bond

backed only by the "full faith and credit" of the issuing corporation

convertible bonds

bonds for which bondholders have the option to convert the bonds into shares of stock.

coupons bonds

name of the owner was not registered; the holder actually clipped an attached coupon and redeemed it in accordance with instructions on the indenture.

subordinated debenture

the holder is not entitled to receive any liquidation payments until the claims of other specified debt issues are satisfied

sinking fund debentures

bonds that must be redeemed on a prespecified year-by-year basis; administered by a trustee who repurchases bonds in the open market.

bond indenture

document that describes specific promises made to bondholders

serial bonds

more structured (and less popular) way to retire bonds on a piecemeal basis (installments)