2.4 Maturity Structure Flashcards
1
Q
Term Bonds
A
These reach maturity on the same date offering a single interest rate
2
Q
Serial Bonds
A
Groups of bonds maturing at different installment periods over a certain length of time
3
Q
Balloon Maturity
A
Associated with serial Bonds
Containing a disproportionately large amount of the principal with one maturity
4
Q
Why would cereal bonds be an advantage to the issuer?
A
They have lower interest expenses over the life of the bond
5
Q
Callable Bond
A
A bond that the company can pay off or redeem prior to its maturity date
6
Q
A Callable bond generally has a higher coupon rate because?
A
It’s riskier to the investor
7
Q
What’s a PUT feature?
A
This allows the investor to force early redemption
8
Q
When would someone exercise a PUT feature?
A
When interest rates rise
