Bonds

Question 1

• Certificate of indebtedness with
  fixed interest rate and maturity
  date
• Long-term investment, in general

Answer 1

Bonds

Question 2

Written agreement on bond issues
between the issuing party and the
bondholder

Answer 2

(BOND) INDENTURE

Question 3

Classifications of Bonds As to issuing party

Answer 3

• Government bonds
• Commercial bonds

Question 4

is a debt security issued by a government/public to support spending and obligations

Answer 4

Government bonds

Question 5

are debt securities issued by a private corporation in order to raise money to grow the business, pay bills, make capital improvements, make acquisitions, and for other business needs.

Answer 5

Commercial bonds

Question 6

Classifications of Bonds As to security

Answer 6

• Mortgage bonds
• Equipment trust bonds
• Collateral trust bonds
• Debenture bond

Question 7

is a bond backed by real estate holdings or real property.

Answer 7

Mortgage bonds

Question 8

it refers to a debt instrument that allows a company to take possession of and enjoy the use of an asset while paying for it over time.

Answer 8

Equipment Trust bonds

Question 9

is a type of secured bond, in which a corporation deposits stocks, bonds, or other securities with a trustee so as to back its bonds.

Answer 9

Collateral Trust bonds

Question 10

• is a type of bond or other debt instrument that is unsecured by collateral.
• type of debt instrument that is not backed by any collateral and usually has a term greater than 10 years

Answer 10

Debenture bonds

Question 11

Classification of Bonds as to transferability

Answer 11

• Bearer bonds
• Coupon bonds
• Registered bonds
  -> Registered as to principal only
  -> Registered as to both principal & interest

Question 12

is a fixed-income security that is owned by the holder, or bearer, rather than by a registered owner.

Answer 12

Bearer Bonds

Question 13

is a bond that is essentially anonymous, with no name on the bond or sale record. The bond represents semi-annual interest payments.

Answer 13

Coupon Bonds

Question 14

It has its owner’s name and contact information recorded with the issuing entity, ensuring coupon payments are correctly distributed.

Answer 14

Registered Bonds

Question 15

Classification of Bonds as to Other classifications

Answer 15

• Zero coupon bonds
• Junk bonds

Question 16

is an investment in debt that does not pay interest but instead trades at a deep discount.

Answer 16

Zero Coupon Bonds

Question 17

• is debt that has been given a low credit rating by a ratings agency, below investment grade.
• that carry a higher risk of default than most bonds

Answer 17

Junk Bonds

Question 18

Factors to consider in Investing in
Credit Securities

Answer 18

1. Interest rate
2. Date of maturity or call
3. Value of security
4. Yield on the security
5. Credit rating of the issuing party
6. Credit rating of the trustee (if any)
7. Credit rating of the underwriter (if any)