TERMS FOR TEXT

Bearer bond -a fixed-income instrument that is owned by whoever is holding it, rather than having a registered owner.

Capital structure - the distribution of a firm's capital between debt and equity

Callable bond – a bond, which issue has the right to redeem prior to its maturity date, under certain conditions.

Collateral - assets pledged as security for a loan

Corporate bond -a debt security issued by a corporation and sold to investors. The backing for the bond is usually the payment ability of the company, which is typically money to be earned from future operations. In some cases, the company's physical assets may be used as collateral for bonds.

Coupon -the contractual interest obligation a bond or debenture issuer covenants to pay to its debt holders. The interest paid on a bond. That is, the coupon is the amount that the issuer must pay to the holder of each bond in exchange for investing in that bond.

Covenant -a clause in a loan agreement written to protect the lender's claim by keeping the borrower's financial position approximately the same as it was at the time the loan agreement was made. Essentially, covenants spell out what the borrower may do and must do in order to satisfy the terms of the loan. Debentures -are long-term unsecured bonds that are backed only by the general creditworthiness of the issuer

Equipment trust certificates - are bonds secured by tangible non-real-estate property, such as heavy equipment or airplanes.

Futures -involve a financial contract that requires the buyer to purchase an asset (or the seller to sell an asset), such as a physical commodity or a financial instrument, at a specific price on a predetermined date in the future.

General obligation bond -usually refers to government bonds and are backed by the full faith and credit of the taxing power (country, municipality, etc.) that issues them.

Indenture -the contract that accompanies a bond and specifies the terms of the loan agreement. It includes management restrictions, called covenants.

Interest payment -the charge for the privilege of borrowing money, typically expressed as an annual percentage rate. The amount of ownership a stockholder has in a company, usually expressed as a percentage.

Investment funds -money that is invested with an expectation of profit

Investments -the act of investing money, b. the amount invested, c. an enterprise, asset, etc., in which money is or can be invested 2. a. the act of investing effort, resources, etc. b. the amount invested

Issuer -an organization that registers, distributes, and sells a security on the primary market. An issuer can be a private company or a government.

Junk bond – a bond with a low rating. They have higher yields because they have a higher risk of default on the part of the issuer. High-yield bonds are considered sufficiently high-risk that the law does not allow banks to invest in them.

Mortgage bond -a long-term bond secured by the payments on one or more mortgages.

Municipal bond -are securities issued by local, county, and state governments

Option -a contract in which the writer (seller) promises that the contract buyer has the right, but not the obligation, to buy or sell a certain security at a certain price (the strike price) on or before a certain expiration date, or exercise date.

Registered bond – a bond whose issuer records ownership and interest payments

Revenue bond – a bond issued by a municipality to finance either a project or an enterprise in which the issuer pledges to the bondholders the revenues generated by the operation of the projects financed.

Secured bond – is the one with collateral attached.

The bond indenture -the contract that accompanies a bond and specifies the terms of the loan agreement. It includes management restrictions, called covenants

The book entry method – the methodwherethe security certificate is not actually given to the holder. Instead, the holder is given a receipt and the information is held electronically. Book-entry securities have become more common as computers become more sophisticated and exchanges increasingly decide to close their trading floors.

Treasury bonds – a debt security backed by the full faith and credit of the United States government with a maturity of more than 10 years. They may be purchased directly from the government or from a bank; they have coupon payments payable every six months.

Treasury notes -a debt security backed by the full faith and credit of the United States government with a maturity between one and 10 years. They may be purchased directly from the government or from a bank; they have coupon payments payable every six months.

Unsecured bond – a debt security, issued by a government or large company, that is not secured by an asset or lien, but rather by the all issuer's assets not otherwise secured.

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