Debt Vocab Flashcards
Discount
Purchased for less than par value
Nominal Yield
Measures the amount of annual interest the investor will receive from the bond
Adjustable/floating rate
The amount of annual interest charges that fluctuates
Income
A predictable stream of payments generated by an investment
Periodic Interest Payment
A payment that is usually made twice a year to compensate the investor for the investor borrowing their money
Premium
Purchased for more than par value
Maturity date
When the issuer pays back its final principal and interest payment
Par value
The amount (other than the last interest payment) the issuer agrees to pay when the bond matures
Current Yield
Measures the annual interest a bond pays baed on market price
Interest
The cost of using someone else’s money
Fixed Rate
The percentage of annual interest if remaining consistent for the life of the bond
Yield to Maturity
Measures the return on investment for an investor holding the bond until maturity
Principal
The amount of money that was originally borrowed
Call Provision
A feature that allows the issuer to pay back the principal before maturity
Coupon Rate
The rate of annual interest that will be charged for the loan
