Debt Securities Flashcards Preview

Series 7 > Debt Securities > Flashcards

Flashcards in Debt Securities Deck (40):
1

Sinking fund

Stretch

2

Reverse REPO

Banks lending money to fed, t-bills collateral

3

T-bills

6 months or less, pays no interest, always issued at discount, Dutch auction, not quoted in 32nds

Money mkt instrument

4

How are govt bonds quoted

32nds

5

CDO

Collateralized debt obligation - backed by pool of loans, bonds, other debt, like credit cards or auto loans

6

Eurobond

Foreign issuer
Foreign currency
Foreign country
Long term

Not registered with SEC

7

YTM

(Annual interest + annual discount per year OR - annual premium per year)/ (purchase price + par value / 2)

Make sure to convert interest and annual disc/prem into dollars$$$

Also, the annual disc/prem is calculated from the purchase price

The bond could be bought at a prem or disc
The bond could be called at a prem or a disc

8

YTC

See YTM, except annual discount or premium per year is adjusted to reflect only up to the earliest call date

9

Term bonds

Issued same time, same maturity, quoted % of par, called randomly

10

Step coupon bond

Start at a low coupon and step up at specific intervals

11

Nominal yield

Quoted on bond, remains fixed, represents the fulcrum

12

Eurodollars

US money invested in foreign banks, traded in NY and London

13

GNMA

Ginni Mae - only direct obligation of Fed govt

14

T-notes

1 - 10 year maturities

15

Jumbo Cd

Min of $100k, $1mm common, negotiable, tradable, no fdic, has coupons and accrued interest

16

LIBOR

Equivalent of effective fed funds rate for foreign banks, US dollars

17

Convertible bond parity

Market price/conversion ratio

18

T-bonds

10 - 30 year maturities

19

Unsecured debt types

Debentures - standard full faith and credit
Income - no interest till company is profitable, think bankruptcy distressed debt

20

Current yield

Annual interest/market price

21

Refunding

Think refinancing of debt, new bonds issued to pay off old ones

22

Balloon issue

Similar to serial, except more bonds mature in later years

23

Eurodollar bond

Foreign OR domestic issuer
Issued oversees
Domestic currency
Short term
Principal and interest paid in US dollars
Traded in both US and foreign mkts

Not registered with SEC

24

REPO

Repurchase agreement - loans secured with t-bills, usually overnight, up to 90 days, usually btwn fed and banks

25

Serial bonds

Issued same time, equal amounts mature each year, quoted YTM

26

Pre funded

Stretch

27

T-strips

Pay no interest, issued at discount, not quoted in 32nds

28

Accrued interest

Corps and munis based on 30 day month and 360 day year

Govt bonds based on actual days in month and year

Calculated from previous coupon date, up to but NOT including the settlement date

29

Bankers acceptance

Similar to post dated check, used for import/export, no interest, issued at discount, time draft

30

Effective fed funds rate

Average fed funds rate computed daily

31

Zero coupon

Stretch

32

Commercial paper

Unfunded, unsecured short term corporate debt, maturity less than 270 days,

33

Series bond

Issued successive years with one maturity date

34

Secured bond types

Mortgage bonds
Equipment trusts
Collateral trusts - stocks and bonds
Guaranteed bonds - by parent company

35

Describe the debt seesaw

Stretch

36

Fed funds rate

Interest rate between BD's, banks and financial institutions, most volatile

37

Convertible bond conversion ratio

Par/conversion price

38

Cmo ads

Can't be compared to a any other security except cmo

39

Auction rate securities

Stable prices
Variable rates

40

Oid

Original issue discount

Like t-bills