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Finance > Midterm 2 > Flashcards

Midterm 2 Flashcards

1
Q

The stated interest payment made on a bond

A

Coupons

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2
Q

The principal amount of a bond that is repaid at the end of the term

A

Face Value

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3
Q

The annual coupon divided by the face value of a bond

A

Coupon rate

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4
Q

Specified date on which the principal amount of a bond is paid

A

Maturity

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5
Q

The rate required in the market on a bond

A

Yield to Maturity

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6
Q

A bonds coupon payment divided by its closing price

A

Current Yield

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7
Q

The written agreement between the corporation and the lender detailing the terms of the debt issue

A

Indenture

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8
Q

The registrar of a company records who owns each bond, and bond payments are made directly to the owner of record.

A

Registered form

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9
Q

A bond issued without record of the owner’s name; payment is made to whomever holds the bond

A

Bearer form

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10
Q

Unsecured debt, usually with a maturity of 10 years or more.

A

Debenture

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11
Q

Unsecured debt, usually with a maturity of under 10 years.

A

Note

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12
Q

An account managed by the bond trustee for early bond redemption

A

Sinking fund

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13
Q

The amount by which the call price exceeds the par value of the bond

A

Call premium

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14
Q

A part of the indenture limiting certain actions that might be taken during the term of the loan, usually to protect the lenders interest

A

Protective covenant

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15
Q

A bond that makes no coupon payments, and thus is initially priced at a deep discount

A

Zero coupon bond

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16
Q

A bond issued with a very low coupon rate

A

Original-issue discount bond

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17
Q

The price a dealer is willing to pay for a security

A

Bid price

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18
Q

The price a dealer is willing to take for a security

A

Asked price

19
Q

The difference between the bid price and the asked price

A

Bid-ask spread

20
Q

The price of a bond net of accrued interest; this is the price that is typically quoted

A

Clean price

21
Q

The price of a bond including accrued interest, also known as the full or invoice price. This is the price the buyer actually pays.

A

Dirty Price

22
Q

Interest rates or rates of return that have been adjusted for inflation

A

Real rates

23
Q

Interest rates or rates of return that have not been adjusted for inflation

A

Nominal rates

24
Q

The relationship between nominal interest rates on default-free, pure discount securities and time to maturity; that is, the pure time value of money.

A

Term structure of interest rates

25
Q

The portion of a nominal interest rate that represents compensation for expected future inflation

A

Inflation premium

26
Q

The compensation investors demand for bearing interest rate risk

A

Interest rate risk premium

27
Q

A plot of the yields on treasury notes and bonds relative to maturity

A

Treasury yield curve

28
Q

The portion of a nominal interest rate or bond yield that represents compensation for the possibility of default

A

Default risk premium

29
Q

The portion of a nominal interest rate or bond yield that represents compensation for unfavorable tax status

A

Taxability premium

30
Q

The portion of a nominal interest rate or bond yield that represents compensation for lack of liquidity

A

Liquidity premium

31
Q

A stocks expected cash dividend by its current price

A

Dividend yield

32
Q

A model that determined the current price of a stock as its dividend next period divided by the discount rate less the dividend growth rate

A

Dividend growth model

33
Q

The dividend growth rate, or the rate at which the value of an investment grows

A

Capital gains yield

34
Q

Equity without priority for dividends or in bankruptcy

A

Common stock

35
Q

A procedure in which shareholder may cast all votes for one member of the board of directors

A

Cumulative voting

36
Q

A procedure in which a shareholder may cast all votes for each member of the board of directors

A

Straight voting

37
Q

A grant of authority by a shareholder allowing another individual to vote his or her shares

A

Proxy

38
Q

Payments by a corporation to shareholders made in either cash or stock

A

Dividend

39
Q

Stock with dividend priority over common stock, normally with a fixed dividend rate, sometimes without voting rights.

A

Preferred stock

40
Q

The market in which new securities are originally sold to investors

A

Primary market

41
Q

The market in which previously issued securities are traded among investors

A

Secondary market

42
Q

An agent who buys and sells securities from inventory

A

Dealer

43
Q

An agent who arranges security transactions among investors

A

Broker

44
Q

As of 2006, a member is the owner of a trading license on the NYSE

A

Member

Finance (3 decks)

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