Finance (Bonds)

Question 0

Debentures

Answer 0

Unsecured long term debt.

More risk.

Financial earning ability is considered.

Higher yield.

Question 1

Bonds

Answer 1

Long term notes issued by the borrower promising to pay its holder a predetermined and fixed am. of interest per year and the face value of the bond at maturity.

Question 2

Subordinated Debentures

Answer 2

A debenture that is subordinated to the other debentures in terms of its payments in case of insolvency.

Question 3

Mortgaged bonds

Answer 3

A bond secured by a lien (right to keep possession) on real property.

Question 4

Long term debt

Answer 4

Bonds with a maturity of one year or more

Question 5

Private and Public bond placement

Answer 5

.

Question 6

Bond

Answer 6

Secured debt but used to describe all long term debt!

Question 7

Indenture

Answer 7

Written agreement between issuer and creditors detailing terms of borrowing.

Question 8

Indentures include:

Answer 8

• Bond terms
• total face amount of bonds issues
• a description of any property used as security
• the repayment arrangements
• any “Call provisions”ex: interest rates changing etc. this is done before maturity.
• any “protective covenants” limitations Etc set amount of cash on hand. Set by creditors.

Question 9

Bonds…

Answer 9

Are issued by governments and corporations as a form of long term debt

Question 10

Terms of a bond

Answer 10

Face value - 1000 increments

Par value - dollar value for balance sheet

Registered form: ownership is recorded, payment made directly to owner.

Form bearer form: Payment is made to the holder.

Security: