02 Debt Flashcards by Brandy S

Q

Bonds

income

bankruptcy

A

fixed income due to fixed interest

senior security - pays 1st in bankruptcy

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Q

Corporate Debt is called

time horizon?

A

Funded Debt

matures 5 + years

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Q

Federal - Bills
Federal - Notes
Federal - Bonds

maturity
sold at
income source

A

< 1 year - usually 1mo - 6mo
Discount - minimum
No interest

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Q

Federal - Bills
Federal - Notes
Federal - Bonds

maturity
sold at
income source

A

2-10 years
% of par
interest every 6 months

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Q

Federal - Bills
Federal - Notes
Federal - Bonds

maturity
sold at
income source

A

10+ years
% of par
interest every 6 months

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Q

Nominal / Coupon Rate

5% = ?

accrued ? paid ?

A

interest % of par

5% = $50

accrued daily paid semi-annually

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Q

par / face value

A

$1,000

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Q

5 M ABC J&J 15 8s of 09

Principal
Interest payment dates
Interest amount
Maturity date

A

$5,000
Jan & Jul 15
8%
2009

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Q

Term

Serial

Balloon

A

one principal payment

portions of principal paid over time

part term part serial

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Q

serial issues

A

issues spread over several yearss

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Q

bonds are stated as

100 = what % & $

A

% of par

100 = 100% of par = 1,000

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Q

point

basis point

A

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Q

Calculate $ of point / bps

1 pt = ?$

1 bps = ?$

80 bps = ?$

A

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Q

Grading Scales

Bank Investment Grade

Speculative Non-Investment Grade

A

S&P Moodys (mood swings)

Bank Investment Grade AAA Aaa

AA Aa

BBB Baa

Speculative Non-Investment Grade BB Ba

B B

C Ca

D D

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Q

Rate the safety of investments

1st

2nd

3rd

A

Fed Govt
Fed Govt Agencies
Municipalities - GO - Gen Issue

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Q

Risky Bonds

Safe to Risky

1.

2.

3.

4.

A

Secured - backed by collateral
Debtentures - not backed by collateral
Subordianted debentures
Income bonds - ony pay if enough $

Q

Debt Service

A

schedule of interest & principal pmts

Q

Redeemed

A

principal paid

Q

Sinking Fund

A

low rated issures dep $ to pay

Q

Bond Calls

Term
Serial

A

random lotto
longest to maturity 1st

Q

tendering

A

issuer offers to buy from mkt @ price they set

Q

call protection

A

fixed time issuer cannot call

Q

Bond Yeild Chart

A

Q

Nominal / Coupon Yeild (CY)

A

Int % of Par

Q

Current Yield (CY)

A

Q

Yield to Maturity (YTM)

A

Also called basis

Q

Yield Curve

Normal is ?
Long Maturity
Inverted means?
Inverted caused by?

A

3% pts
greater yield
Long-term Int is lower than short-term int
investors buying long-term, selling short-term

Q

Yield Spread

Recession

Expansion

A

Q

Open-End Indentues

A

subsequestn issue on same collateral

Q

Closed-End Indentures

A

No sam class issue

2nd issue subordinate claim

Q

Prior Liens

A

precedence over 1st mortgate issue

Q

Closed End Covenant

Open End Covenant

A

senior claim

subsequent issue same property