Lesson 6 Chapter 6 Flashcards
What is the other term of Fixed-Income securities?
Debt securities
They represent the debt of entities that issues them.
What is the term of a fixed-income security?
The promise of the issuer to repay the principal or maturity value on the maturity date.
What is the other term for principal?
Maturity value
What are the varieties of Fixed-income securities?
Bonds
Debentures
Money market instruments
Mortgages
Preferred Shares
What are the two commonly cited reasons fixed income securities are issued?
- Financial operations or growth
- To take advantage of financial leverage
What is the other name for par value?
Face value
What is a coupon rate?
The interest or rate paid by the bond issuer relative to the bond’s par or face value over the term of the bond.
What is “term to maturity?”
The time that remains before a bond matures
What is bond price?
It is the sum of the present value of all future interest payments plus the present value of the future repayment of the loan upon maturity.
What is Yield to Maturity?
The annual rate of return on a bond that is held to maturity
What are floating-rate securities?
Are bonds with variable coupon rates
What are the other terms for coupon?
Interest income
Bond income
Coupon income
It indicates the income the bondholder will receive
What is a callable bond?
May be redeemed by the investor on the earlier of two maturity dates
What is a retractable bond?
May be redeemed by the issuer prior to the maturity date
What is a purchase fund?
An account which an issuer buys its bonds or preferred shares on the secondary market if they are trading below stipulated price.
