Personal finance chapter 15

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general obligations bond

a bond backed by the full faith, credit, and unlimited taxing power of the government that issued it

registered coupon bond

a bond registered for principal only and not interest

convertible bond

a bond that can be exchanged at the owner's option, for a specified number of shares of the corporation's common stock

debenture

a bond that is backed only by the reputation of the issuing corporation

bearer bond

a bond that is not registered in the investor's name

registered bond

a bond that is registered in the owner's name by the issuing company

revenue bond

a bond that is repaid from the income generated by the project it is designed to finance

mortgage bond

a corporate bond secured by various assets of the issuing firm

corporate bond

a corporation's written pledge to repay a specified amount of money with interest

municipal bond

a debt security issued by a state or local government

call feature

a feature that allows the corporation to call in or buy outstanding bonds from current bondholders before the maturity date

trustee

a financially independent firm that acts as the bondholders' representative

sinking fund

a fund to which annual or semi annual deposits are made for the purpose of redeeming a bond issue

bond indenture

a legal document that details all of the conditions relating to a bond issue

bond ladder

a strategy where investors divide their investment dollars among bonds that mature at regular intervals in order to balance risk and return

government bond

a written pledge of a government or a municipality to repay a specified sum of money, along with interest

yield to maturity

a yield calculation that takes into account the relationship among a bond's maturity, the current price, and the dollar amount of interest

subordinated debenture

an unsecured bond that gives the bondholders a claim secondary to that of other designated bondholders with respect to interest payments, repayment, and assets

serial bonds

bonds of a single issue that mature on different dates

high-yield bonds

corporate bonds that pay higher interest, but also have a higher rate of default

current yield

determined by dividing the annual dollar amount generated by an investment by the investment's current market value

maturity date

for a corporate bond, the date on which the corporation is to repay the borrowed money

convertible corporate note

legal debt that is convertible to shares of common stock at the investor's option

face value

the dollar amount the bondholder will receive at the bond's maturity

yield

the rate of return earned by an investor who holds a bond for a stated period of time- usually a 12 month period


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