LO 2.e And LO 2.f

Question 1

Zero coupon bonds

Answer 1

Bonda sold at a deep discount their face value and maturity at par. Do not pay interest pymts.

Question 2

Zero coupons are issued by

Answer 2

Corporations, municipalities, US treasury issued zeros called STRIPS and may be cretaed by a broker dealer from other types of securities.

Question 3

Corporate bonds

Answer 3

Debt securities can be secured or unsecured. Secured are backed by various kinds or assests owned by issuer. Unsecured backes by the corporations full faith and credit only. Settle T+2 and pay accrues interest based on 30 day month/360 year.

Question 4

Secured debt (mortgage bonds)

Answer 4

Corporation sell debt backed by real estate and physical assets.

Question 5

Equipment trust certificates

Answer 5

Is a secured loan, railroads and other transpo companies issue certificates for their equipment. The title to equipment is held in a trust by a bank acting as a trustee for investors. Once company pays it gets the clear tile for the equipment. If not, the trustee sells the equipment on behalf of bond holders.

Question 6

Secured bonds

Answer 6

Mortgage bonds
Equipment trust certificates
Collateral trust bonds

Question 7

Unsecured bonds

Answer 7

Debentures
Guaranteed bonds
Income bonds