02 Debt Flashcards

1
Q

Bonds

income

bankruptcy

A

fixed income due to fixed interest

senior security - pays 1st in bankruptcy

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2
Q

Corporate Debt is called

time horizon?

A

Funded Debt

matures 5 + years

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3
Q
  • Federal - Bills
  • Federal - Notes
  • Federal - Bonds
  1. maturity
  2. sold at
  3. income source
A
  1. < 1 year - usually 1mo - 6mo
  2. Discount - minimum
  3. No interest
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4
Q
  • Federal - Bills
  • Federal - Notes
  • Federal - Bonds
  1. maturity
  2. sold at
  3. income source
A
  1. 2-10 years
  2. % of par
  3. interest every 6 months
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5
Q
  • Federal - Bills
  • Federal - Notes
  • Federal - Bonds
  1. maturity
  2. sold at
  3. income source
A
  1. 10+ years
  2. % of par
  3. interest every 6 months
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6
Q

Nominal / Coupon Rate

5% = ?

accrued ? paid ?

A

interest % of par

5% = $50

accrued daily paid semi-annually

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7
Q

par / face value

A

$1,000

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8
Q

5 M ABC J&J 15 8s of 09

  1. Principal
  2. Interest payment dates
  3. Interest amount
  4. Maturity date
A
  1. $5,000
  2. Jan & Jul 15
  3. 8%
  4. 2009
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9
Q

Term

Serial

Balloon

A

one principal payment

portions of principal paid over time

part term part serial

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10
Q

serial issues

A

issues spread over several yearss

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11
Q

bonds are stated as

100 = what % & $

A

% of par

100 = 100% of par = 1,000

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12
Q

point

basis point

A
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13
Q

Calculate $ of point / bps

1 pt = ?$

1 bps = ?$

80 bps = ?$

A
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14
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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15
Q

Rate the safety of investments

1st

2nd

3rd

A
  1. Fed Govt
  2. Fed Govt Agencies
  3. Municipalities - GO - Gen Issue
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16
Q

Risky Bonds

Safe to Risky

1.

2.

3.

4.

A
  1. Secured - backed by collateral
  2. Debtentures - not backed by collateral
  3. Subordianted debentures
  4. Income bonds - ony pay if enough $
17
Q

Debt Service

A

schedule of interest & principal pmts

18
Q

Redeemed

A

principal paid

19
Q

Sinking Fund

A

low rated issures dep $ to pay

20
Q

Bond Calls

  1. Term
  2. Serial
A
  1. random lotto
  2. longest to maturity 1st
21
Q

tendering

A

issuer offers to buy from mkt @ price they set

22
Q

call protection

A

fixed time issuer cannot call

23
Q

Bond Yeild Chart

A
24
Q

Nominal / Coupon Yeild (CY)

A

Int % of Par

25
Q

Current Yield (CY)

A
26
Q

Yield to Maturity (YTM)

A

Also called basis

27
Q

Yield Curve

  1. Normal is ?
  2. Long Maturity
  3. Inverted means?
  4. Inverted caused by?
A
  1. 3% pts
  2. greater yield
  3. Long-term Int is lower than short-term int
  4. investors buying long-term, selling short-term
28
Q

Yield Spread

Recession

Expansion

A
29
Q

Open-End Indentues

A

subsequestn issue on same collateral

30
Q

Closed-End Indentures

A

No sam class issue

2nd issue subordinate claim

31
Q

Prior Liens

A

precedence over 1st mortgate issue

32
Q

Closed End Covenant

Open End Covenant

A

senior claim

subsequent issue same property