Chapter 13 Bonds vocab

municipal bond

A bond issued by a state or local government.

Zero Coupon bond

A bond that is sold at a deep discount, makes not 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.

junk bond

A bond with a very low rating, or no rating at all.

mortgage bond

A corporate bond backed by specific assets as collateral to assure repayment of the debt.

debenture bond

A corporate bond not backed by collateral but only by the general credit standing of the corporation.

convertible bond

A corporate bond that the bondholder can choose to exchange for a specified number of shares of the corporation's common stock.

investment-grade bond

A high-quality bond considered to be a safe investment.

general obligation bond

A municipal bond backed by the power of the issuing state of local government to levy taxes to pay off the loan.

revenue bond

A municipal bond issued to raise money for a public-works project and repaid by the income from the project.

agency bond

Debt security issued by federal agencies.

face value

The amount the bondholder will receive when the bond is repaid at maturity.