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EMBA > Accounting 2a - Stocks & Bonds - Bonds > Flashcards

Accounting 2a - Stocks & Bonds - Bonds Flashcards

1
Q

Debt

A

Money borrowed in exchange for interest.

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2
Q

Secured debt

A

Borrowed money that is backed by one or more assets as collateral. (debt related)

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3
Q

Unsecured debt

A

Borrowed money that is not backed with collateral. (debt related)

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4
Q

Principal

A

The original amount of money that was borrowed.

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5
Q

Bond

A

A debt instrument that allows an investor to loan money for a defined period of time in exchange for regular interest payments. Repayment is made as a lump sum at the end of the period.

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6
Q

Corporate bond

A

A bond issued by a corporation. (bond related)

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7
Q

Zero-coupon bond

A

A bond that is issued at a deep discount to its face value and pays no interest. (bond related)

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8
Q

Convertible bond

A

A bond that can be exchanged for a specified number of common shares in the issuing company. (bond related)

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9
Q

Callable bond

A

(bond related)

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10
Q

Government bonds

A

Bonds issued by governments. Called munis when issued by municipal governments and treasuries when issued by the United States government. (bond related)

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11
Q

Bills

A

Government bonds that mature in less than a year. (govt bond related)

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12
Q

Notes

A

Government bonds that mature in one to ten years. (govt bond related)

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13
Q

Bonds

A

Government bonds that mature in more than ten years. (govt bond related)

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14
Q

Par value (face value)

A

The amount of money loaned to the bond issuer.

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15
Q

Coupon

A

The bond?s interest rate.

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16
Q

Maturity date

A

The date at which the par value is repaid to the bondholder.

17
Q

Yield to maturity (YTM)

A

The total return anticipated on a bond if the bond is held until maturity. YTM accounts for par value, market value (purchase price), coupon, current yield, and time to maturity.

18
Q

Current yield

A

The interest, expressed as a percentage of current market value, an investor will receive for purchasing a bond and holding it for one year.

19
Q

Credit risk

A

The risk that the bond issuer fails to make interest payments or fails to repay the bond at maturity.

20
Q

Investment grade

A

Bonds with the lowest credit risk, rated between Aaa/AAA and Baa/BBB. (credit risk related)

21
Q

Junk bonds

A

Bonds with the highest credit risk, rated below Baa/BBB. (credit risk related)

EMBA (10 decks)

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