Types Of Maturity Schedules + Yields / Prices Of Bonds

Question 1

Maturity

Answer 1

The date at which the bond matures and the bond holder gets paid back the face value or par value of the bond.

BONDS are “REDEEMED” at MATURITY

THINK OF BOND SEESAW

Question 2

NOMINAL YIELD=

Answer 2

COUPON INTEREST RATE

YIELD IS USUALLY EXPRESSED IN TERMS OF A %

Question 3

CURRENT YIELD =

Answer 3

% COUPON RATE x $1000(PAR)= ANNUAL INTEREST

ANNUAL INTEREST / CURRENT MARKET PRICE= CURRENT YIELD

Question 4

TERM BONDS

Answer 4

A COMPANY ISSUES A LARGE NUMBER OF BONDS ALL AT ONCE THAT ALL MATURE AT THE SAME TIME.

Question 5

SERIES BONDS

Answer 5

BONDS THAT ARE ISSUED IN CONSECUTIVE YEARS BUT ALL HAVE THE SAME MATURITY DATE

Question 6

SERIAL BONDS

Answer 6

BONDS SET TO MATURE AT REGULAR INTERVALS - USED TO FUND PROJECTS THAT NEED A STEADY INCOME

Question 7

WHEN THE CUSTOMER PURCHASES A BOND

Answer 7

THE RR MUST SEND A TRADE CONFIRMATION BY THE SETTLEMENT DATE
2 BUSINESS DAYS AFTER THE TRADE DATE (T+2)
(T+2) APPLIES TO MOST SECURITIES
GOVERNMENT SECURITIES AND STOCK OPTIONS SETTLE (T+1)