Bonds are major sources of corporate borrowing. Debentures, the most common type of corporate bond, are backed by the general credit of the corporation, while asset-backed bonds are backed by specific corporate assets, such as property or equipment.
Municipal Bonds
Millions of bonds have been issued by state and local governments. General obligation bonds are backed by the full faith and credit of the issuer, and revenue bonds by the income generated by the particular project being financed.
Agency Bonds
Some government sponsored but privately owned corporations (like Fannie Mae and Freddie Mac), and certain federal government agencies (like Ginnie Mae and Tennessee Valley Authority) issue bonds to raise funds either to make loan money available or to pay off new projects.
U.S. Treasury Bonds
US Treasury bonds are backed by the full faith and credit of the United State government. When the government spends more than it collects in taxes and other revenues, it issues Treasury notes, bills, and bonds to borrow the money to pay the difference. Treasury bonds have the longest term or period of time before the loan must be repaid (10 years or more). Treasury bills have the shortest (less than two years).
Default
Failure to pay principal or interest when due. Defaults can also occur for failure to meet non-payment obligations, such as reporting requirements, or when a material problem occurs for the issuer, such as a bankruptcy.
Fixed-Income Investments
Pay interest on a set schedule. Fixed-Income Investments include corporate, municipal, agency, and U.S. Treasury bonds.
High-Yield Bonds
To attract investors, the issuers of these bonds pay a higher rate of interest than investment grade bonds with the same maturity. They are rated below investment grade bonds and are also called “Junk Bonds.”
Issuer
An entity which issues and is obligated to pay principal and interest on a debt security.
Interest Rate
Compensation paid or to be paid for the use of money. Interest is generally expressed as a percentage rate. (Also referred to as coupon rate)
Investment Grade Bonds
Bonds that are sold by a very reliable issuer, the government, a large corporation, or a government agency that is most likely to repay the loan and the interest as promised.
IOU
Means exactly as it sounds, “I Owe You.” It is an acknowledgement of a debt.
Maturity
The date when the principal amount of a security is payable.
Par value
The principal amount of a bond or note due at maturity.( also referred to as face value)
Prepayment
The unscheduled partial or complete payment of the principal amount outstanding on a mortgage or other debt before it is due.
Prinicipal
The face amount of a bond, payable at maturity (also referred to as face or par value)
Trade Date
The date when the purchase or sale of a bond is transacted.
Corporate Bonds
Bonds are major sources of corporate borrowing. Debentures, the most common type of corporate bond, are backed by the general credit of the corporation, while asset-backed bonds are backed by specific corporate assets, such as property or equipment.
Municipal Bonds
Millions of bonds have been issued by state and local governments. General obligation bonds are backed by the full faith and credit of the issuer, and revenue bonds by the income generated by the particular project being financed.
Agency Bonds
Some government sponsored but privately owned corporations (like Fannie Mae and Freddie Mac), and certain federal government agencies (like Ginnie Mae and Tennessee Valley Authority) issue bonds to raise funds either to make loan money available or to pay off new projects.
U.S. Treasury Bonds
US Treasury bonds are backed by the full faith and credit of the United State government. When the government spends more than it collects in taxes and other revenues, it issues Treasury notes, bills, and bonds to borrow the money to pay the difference. Treasury bonds have the longest term or period of time before the loan must be repaid (10 years or more). Treasury bills have the shortest (less than two years).
Default
Failure to pay principal or interest when due. Defaults can also occur for failure to meet non-payment obligations, such as reporting requirements, or when a material problem occurs for the issuer, such as a bankruptcy.
Fixed-Income Investments
Pay interest on a set schedule. Fixed-Income Investments include corporate, municipal, agency, and U.S. Treasury bonds.
High-Yield Bonds
To attract investors, the issuers of these bonds pay a higher rate of interest than investment grade bonds with the same maturity. They are rated below investment grade bonds and are also called “Junk Bonds.”
Issuer
An entity which issues and is obligated to pay principal and interest on a debt security.
Interest Rate
Compensation paid or to be paid for the use of money. Interest is generally expressed as a percentage rate. (Also referred to as coupon rate)
Investment Grade Bonds
Bonds that are sold by a very reliable issuer, the government, a large corporation, or a government agency that is most likely to repay the loan and the interest as promised.
IOU
Means exactly as it sounds, “I Owe You.” It is an acknowledgement of a debt.
Maturity
The date when the principal amount of a security is payable.
Par value
The principal amount of a bond or note due at maturity.( also referred to as face value)
Prepayment
The unscheduled partial or complete payment of the principal amount outstanding on a mortgage or other debt before it is due.
Prinicipal
The face amount of a bond, payable at maturity (also referred to as face or par value)
Trade Date
The date when the purchase or sale of a bond is transacted.
Flash Cards
