The Bond Market Flashcards
What are bonds?
Securities that represent debt owed by the issuer to the investor
And typically have specific payments on specific dates
Some types of bonds
Long-term government bonds (T-bonds)
Municipal bonds
Corporate bonds
Maturity
Treasury bill
Less than one year
Maturity
Treasury note
1 to 10 year
Maturity
Treasury bond
10 to 30 years
Treasury bond interest rates has no risk because
The treasury can print money to payoff debt
Very low interest rates
What are municipal bonds
Issued by local, county and state governments
Used to finance public interest projects
Tax-free municipal interest rate
Municipal bonds
Two types
General obligation bonds
Revenue bonds
What is a general obligation bonds
Barked by taxation
Revenue bonds
Barked by project revenue
Characteristics of corporate bonds
Registered bonds
Restrictive covenants
Call provisions
Conversion
Classification of corporate bonds
Secured bonds
Unsecured bonds
Junk bonds
Financial guarantees for bonds
Some debt issuers purchase financial guarantees to lower the risk of their debt
Oversight of the bonds market
Bond trades are not available to the public making trades less transparent
