Unit 5- Corporate Bonds Flashcards
1
Q
Another name for “income bonds”?
A
Adjustment Bonds
2
Q
The return on a zero coupon bond?
A
Accretion
3
Q
In a corporate bankruptcy, what is an “administrative claim”?
A
This is the claim to reconcile/assets that entities who administer the bankruptcy have? (Lawyers, etc)
They have to be paid, so they have 1st priority.
4
Q
Define: “conversion price” and “conversion ratio”?
A
Conversion price = the stock price at which a convertible bond can be converted.
Conversion ratio = the number of shares that a convertible bond can be converted into.
5
Q
In the event of a corporate liquidation, what priority does accrued taxes have?
A
First priority
6
Q
What happens to a bond’s market price when a call is announced?
A
The market price drops to the call price.
