Ch 6 Flashcards
when a company or government wishes to borrow money from the public, it issues/sells debt securities called…
bonds
price a dealer is willing to pay for a bond
bid price
price a dealer is willing to sell for a bond
ask price
brand new bond, never been issued
Primary Bond
used bond
Secondary Bond
issued by corporations, sold to investors
Corporate Bonds
less risky than a corporate bond. used to support gov spending
Government Bond
Government bond with 10+ years to maturity
US Treasury Bond
Government bond with 1-10 years to maturity
US Treasury Note
Government bond with 1 year or less to maturity
US Treasury Bill
City or local bond
Municipal Bond
Types of Municipal Bonds
General obligation, Revenue Bond, International Bond
date on which the principal of bond is repaid
Maturity
bond agreement
Indenture
unsecured debt of 10 years or more
Debenture
Unsecured debt of 10 years or less
Note
No record of ownership
Bearer form Bond
tracks ownership (issuer tracks)
Registered Form Bonds
allows a company to repurchase at a pre-specified price
Call Provisions
prohibits company from re-purchasing before specific date
Deferred Call Provision
Annual or semi-annual interest paid
Capital
no interest paid; deep discount for selling price
Zero Corporates
the amount at end of bond (1000)
face value
interest paid on terms of a % (coupon/face value)
coupon rate
an equity security that represents ownership in a corporation
stock
a primary factor used in valuing stocks
dividends
details, terms, conditions (SPA)
Stock Purchase Agreement
equity without priority in dividends. have voting rights and elect a board of directors
common stock
right for someone else to vote on your behalf
proxy
equity with priority in dividends
preffered stock
must make goods on missed dividends
cumulative
don’t need to pay missed dividends
non-cumulative
no inventory, rather they connect buyers and sellers
brokers
maintain own inventory of stocks they buy and sell
dealers
oldest US stock exchange
New york stock exchange (NYSE)
national association of sec dealer, automated quotation system
NASDAQ
a variable rate coupon which adjusts with market interest rates
floating rate
