Chapter 14

Question 1

Bond

Answer 1

Debt issued by the government or a company with a promise to repay the original amount plus interest by a given date

Question 2

bond ladder

Answer 2

A method of managing investments by buying bonds that mature in intervals

Question 3

call feature

Answer 3

An option for the issuer of a bond to buy back the bond prior to its maturity date

Question 4

convertible bonds

Answer 4

Debt securities that allow the holder to convert them into shares of common stock at an agreed-upon price

Question 5

corporate bonds

Answer 5

Debt obligations issued by private and public corporations

Question 6

Coupon

Answer 6

The interest payment of a bond

Question 7

current yield

Answer 7

Debt due within a short time, usually a year

Question 8

Discount

Answer 8

A price below the face value of a bond

Question 9

high-yield bonds

Answer 9

Corporate bonds issued by organizations that do not qualify for investment-grade ratings

Question 10

Maturity

Answer 10

He repayment date of bond debt

Question 11

municipal bond

Answer 11

A debt security issued by a state, municipality, or county to finance its capital expenditures

Question 12

Par

Answer 12

The face value of a bond

Question 13

Premium

Answer 13

A price above the face value of a bond

Question 14

Yield

Answer 14

The interest rate of a bond

Question 15

yield to call

Answer 15

The interest rate you receive between now and the early repayment date

Question 16

yield to maturity

Answer 16

The rate of return you receive between the date you buy the bond and the date it is repaid, including all payouts, coupons, and capital gains/losses