Debt Fundamentals

Question 1

What is a Bond?

Answer 1

Are debt securities, representing money loaned to an issuer. Bondholders are not equity owners of the business the way stockholders are. Bondholders are creditors who are owed money for a debt.

Question 2

Normal pay value of bonds?

Answer 2

$1,000

Question 3

Term bonds

Answer 3

A bond issue for which every bond has the same interest rate and maturity. Corporate bond issues and U.S. government bond issues are typically term bond issues.

Question 4

Zero-coupon Bonds

Answer 4

Issued with a stated par value but with a coupon rate of zero. No interest payments made but bonds are purchased at a discount from par and are redeemed upon maturity at par value

Question 5

Serial Bonds

Answer 5

An issue with differing maturity dates. Which require different interest rates. Most municipal issues and corporate equipment trust certificates are serial bonds.

Question 6

Series Bonds

Answer 6

An issue of bonds with the same maturity but different dates of issuance. Rare and are used to finance long-term construction projects where all the money is not needed at once.