Private Bonds

Question 1

Corporations

Answer 1

bonds issued by enterprises

regardless if owned by private firm or government

Question 2

Graded Bonds

Answer 2

investment graded bonds - stable company, low default risk, lower IR

Question 3

Non-investment graded

Answer 3

high yield but riskier
e.g junk bonds
some cases firms must pledged spec. asset to bondholders

Question 4

Senior Debt

Answer 4

holders of senior debt have 1st claim on firms revenue & asset in case of default

Question 5

Subordinated Debt

Answer 5

no claim on asset/income until all other BH have been paid

senior –> junior –> preferred stock –> common stock etc.

Question 6

asset backed security

Answer 6

required payments will be made out of income generated spec. asset
E.x mortgages

Question 7

Security vehicle

Answer 7

a) Is not backed by full faith & credit of a government or private company but
b) is supported by stream of CF issuer is expected to receive in future from spec. asset