02 Debt Flashcards
Bonds
income
bankruptcy
fixed income due to fixed interest
senior security - pays 1st in bankruptcy
Corporate Debt is called
time horizon?
Funded Debt
matures 5 + years
- Federal - Bills
- Federal - Notes
- Federal - Bonds
- maturity
- sold at
- income source
- < 1 year - usually 1mo - 6mo
- Discount - minimum
- No interest
- Federal - Bills
- Federal - Notes
- Federal - Bonds
- maturity
- sold at
- income source
- 2-10 years
- % of par
- interest every 6 months
- Federal - Bills
- Federal - Notes
- Federal - Bonds
- maturity
- sold at
- income source
- 10+ years
- % of par
- interest every 6 months
Nominal / Coupon Rate
5% = ?
accrued ? paid ?
interest % of par
5% = $50
accrued daily paid semi-annually
par / face value
$1,000
5 M ABC J&J 15 8s of 09
- Principal
- Interest payment dates
- Interest amount
- Maturity date
- $5,000
- Jan & Jul 15
- 8%
- 2009
Term
Serial
Balloon
one principal payment
portions of principal paid over time
part term part serial
serial issues
issues spread over several yearss
bonds are stated as
100 = what % & $
% of par
100 = 100% of par = 1,000
point
basis point
Calculate $ of point / bps
1 pt = ?$
1 bps = ?$
80 bps = ?$
Grading Scales
Bank Investment Grade
Speculative Non-Investment Grade
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
Rate the safety of investments
1st
2nd
3rd
- Fed Govt
- Fed Govt Agencies
- Municipalities - GO - Gen Issue