Finance Chapter 13, Investing in Bonds

Mortgage Bond

"or Secured Bond", is a corporate bond backed by specific assets as collateral to assure repayment.

Agency Bond

A bond issued by a federal agency

Municiple Bond

A bond issued by the state and local governments.

Junk Bond

A bond that has a low rating, or no rating at all.

Zero-Coupon Bond

A bond that is sold at a deep discount, makes no interest payments, and is redeemable for its face value at maturity.

Callable Bond

A bond that the issuer has the right to pay off before its maturity date.

Tax deferred bond

A bond usually issued by municipal, county, or state governments whose interest payments are not subject to federal and, in some cases, state and local income tax.

Debenture

A corporate bond that is not backd by collateral but by the general credit standing of the corporation.

Convertible Bond

A corporate bond that the bondholder can choose to exchange for shares of the corporation.

General Obligation Bond

A municiple bond backed by the power of issuing state or local government.

Revenue Bond

A municiple bond issued to raise money for a public-works project.

Agency Bond

Your loaning money to an agency.

Coupon Bond

a bond issued with detachable coupons that must be presented to the issuer for interest payments

Registered Bond

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

Premium Bond

a government bond that bears no interest or capital gains but enters the holder into lotteries

Tax Exempt Bond

sold by local and state governments; interest paid on the bond is not taxed by the federal government

Face Value (Principle)

The amount the bondholder will be repaid at maturity.

Investment-Grade Bond

Any bond with a Baa rating or higher in Moody's, or BBB in Standard & Poor's.

Discount Bond

Bond selling below its par value.

Fixed Income Bond

Fixed income refers to any type of investment under which the borrower/issuer is obliged to make payments of a fixed amount on a fixed schedule: for example, if the borrower has to pay interest at a fixed rate once a year, and to repay the principal amount on maturity.