1-80 Flashcards
What is a step-up, long-term CD?
A CD that offers an interest rate that is lower than current rates, with subsequent interest rates paid being higher
General Obligation (GO) bonds are backed by the issuerÕs ________________________ and their ability to levy _______.
General Obligation (GO) bonds are backed by the issuerÕs full faith and credit and their ability to levy taxes.
By what types of taxes are state general obligation bonds backed?
Income, sales, or gasoline tax, but also licensing fees and fines.
Local general obligation bonds are backed by what type of tax?
Property tax (e.g., school district bonds)
How is property tax calculated?
Assessed value x millage rate
What does 1 mill equal?
$1.00 per thousand dollars of assessed value (.001 as a decimal)
When analyzing GO bonds, what are some important considerations?
Property values, per capita income and debt, population, current debt, tax collection, unfunded pension liabilities
Define overlapping debt.
Debt of a municipality that is shared with another political entity (e.g., school district debt)
Are debentures considered secured or unsecured?
Unsecured. They are backed only by the issuerÕs full faith and credit.
Name some of the advantages of buying convertible bonds.
Consistent interest payments, appreciation if stock rises, downside protection if stock falls (since itÕs still a bond).
What are Eurodollar bonds?
Dollar-denominated bonds issued outside the U.S.
What bonds are dollar-denominated, U.S. registered, and issued by multinational companies and foreign governments?
Yankee Bonds
T-Bills are issued in maturities of: ____ week, ____ week, ____ week, and ____ week
T-Bills are issued in maturities of: 4 week, 13 week, 26 week, and 52 week
What is the maturity range of a T-Note?
2 to 10 years
What is the maturity range of a T-Bond?
More than 10 years
