Flashcards in F11 Bonds Deck (17):

1

## Term Bond

### Bond that will pay the entire principal upon maturity at the END of the term

2

## Serial Bond

###
The principal matures in installments

(like when you eat cereal, every morning)

3

## Debenture bonds

### unsecured bonds that are not supported by collateral

4

## Rate printed on the bond. What's called & represent?

### Stated, face, coupon, nominal rate = amount Investor RECEIVES with each payment

5

## Actual rate of interest a company is paying

### Effective Rate, Market Interest Rate or Yield = actual rate paid

6

## (Face Value + Premium) or (Face Value - Discount)

###
Carrying Value = net amount on BS

Also called Book Value or Reported Amount

7

## When the effective rate is Lower than stated rate

### Premium

8

## When the effective rate is Higher than the stated rate

### Discount

9

## Restrictions that borrowers agree to

### Covenants

10

## When issuer has right to redeem bond prior to maturity

### Callable bond

11

## When bond can be converted into common stock of debtor at the bondholders option

### Convertible bond

12

## Issuance of Bonds JEs

###
DR Cash

DR Discount or CR Premium

CR Bonds Payable

13

## Amortization of Bond JEs

###
DR Interest Expense

DR Premium or CR Discount

CR Cash

14

## Amount you need to invest today for "x" years at "i" interest rate to get $1 back in future

### PV of Amount (Lump Sum)

15

## repeated cash flows on a systematic basis, paid at the End of each period

###
PV of Ordinary Annuity AKA Annuity in Arrears

This is common for bond interest payments

16

## repeated cash flows on a systematic basis, paid at the Beginning of each period

###
PV of Annuity Due AKA Annuity in Advance

Common for Rent payments

17