Chap 11 Flashcards
An amount of money you can obtain quickly in case of immediate need
Emergency Fund
A short term loan that is approved before the money is actually needed
Line of Credit
A high-risk investment made in the hope of earning a relatively large profit in a short time
Speculative investment
The ability to buy or sell an investment quickly without substanibility affecting the investments value
Liquidity
The process of spreading your assets among several different types of investments to lessen risk
Asset allocation
The written pledge of a government or a municipality to repay a specified sum of money, along with interest
Government bond
A debt security issued by a state or local government
Municipal bond
A bond backed by the full faith, credit, and unlimited taxing power of the government that issued it.
General obligation bond
A bond that is repaid from the income generated by the project it is designed to finance
Revenue bond
A corporations written pledge to repay a specified amount of money with interest
Corporate bond
The dollar amount the bondholder will receive at the bonds maturity
Face value
For a corporate bond, the date on which the corporation is to repay the borrowed money
Maturity date
A legal document that details all of the conditions relating to a bond issue
Bond indenture
A financially independent firm that acts as the bondholders representative
Trustee
A bond that is backed only by the reputation of the issuing corporation
Debenture
A corporate bond secured by various assets of the issuing firm
Mortgage bond
A bond that can be exchanged, at the owners option, for a specified number of shares of the corporations common stock
Convertible bond
A corporate bond that pays higher interest but also has a higher risk of default
High yield bond
A feature that allows the corporation to call in, or buy, outstanding bonds from current bondholders before maturity date
Call feature
A fund to which annual or semiannual deposits are made for the purpose of redeeming a bond issue
Sinking fund
Bonds of a single issue that mature on different dates
Serial bonds
A bond that is registered in the owners name by the issuing company
Registered bond
A bond that is registered for principal only, not for interest
Registered coupon bond
The rate of return earned by an investor who holds a bond for a stated period of time.
Yield
Determined by dividing the yearly dollar amount of interest by the bonds current price
Current yield
