Types Of Bond Certificates

Question 1

FULLY REGISTERED BONDS

Answer 1

• MOST COMMON TYPE
• BOTH INTEREST AND PRINCIPLE ARE REGISTERED IN THE BONDHOLDERS NAME
• INTEREST IS AUTOMATICALLY SENT TWICE A YEAR

Question 2

PARTIALLY REGISTERED BONDS

Answer 2

• ONLY PRINCIPAL IS REGISTERED IN INVESTOR’S NAME
• ONLY REGISTERED PERSON CAN RECEIVE PAR VALUE AND PRINCIPAL AT MATURITY
• THE INTEREST IS NOT REGISTERED IN THE INVESTOR’S NAME
• NO LONGER ISSUED
• STILL TRADED

Question 3

BOOK ENTRY CERTIFICATES

Answer 3

• REGISTERED AND RECORDED ELECTRONICALLY IN “BOOK ENTRIES”
• ISSUED BY US GOVERNMENT
• NO CERTIFICATES OR COUPONS ARE GIVEN OUT
• INTEREST AUTOMATICALLY SENT OUT

Question 4

BEARER BONDS

Answer 4

• CALLED COUPON BONDS B/C They have coupons representing the interest rates on them. This type of bond is where “coupon rate” came from.
• NO NAME IS REGISTERED TO THE BOND
• SEMI ANNUALLY THE BONDHOLDER BRINGS THE COUPON TO THE ISSUER AND ISSUER PAYS THE INTEREST PAYMENT
• CAN BE EASILY LOST OR STOLEN
• ARE NO LONGER ISSUED IN THE U.S.
• SOME ARE STILL TRADED ON THE SECONDARY MARKET