Personal finance chapter 15
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
