18 Questions
What is the purpose of the issue price of a bond?
To indicate the original sale price of the bond
What is the main difference between secured and unsecured bonds?
The collateral backing the bond
What is the benefit of a callable bond to the issuer?
The option to pay off the bond early at a premium
What is the primary advantage of secured bonds over unsecured bonds?
Lower risk due to collateral
What is a mortgaged-backed security an example of?
Secured bond
Why might an issuer choose to call its bonds?
To issue new bonds at a lower interest rate
What type of bond is secured by a mortgage on real properties?
Mortgage bond
Which type of bond does not have collateral security?
Debenture bond
What type of bond can be exchanged for shares of the issuing entity?
Convertible bond
Which type of bond has a single date of maturity?
Term bond
What type of bond is unregistered in the sense that the name of the bondholder is not recorded on the company books?
Coupon or bearer bond
Which type of bond has a series of maturity dates instead of a single one?
Serial bond
Why do companies issue debt instead of equity?
To avoid diluting ownership and potentially earn more from the funds than the cost of interest
What is the main characteristic of public bonds?
They are sold to individuals and financial institutions
What is the obligation of the issuer in a bond issue?
To pay a fixed amount of interest periodically and repay a fixed amount of principal at the date of maturity
How often are interest payments usually made on bonds?
Every six months
What is the term used to describe the public debt market based on the issue's maturity?
Money Market, Notes, and Bonds
What is the main difference between notes and bonds?
Notes have maturities in excess of 1 year but less than 10 years, while bonds have maturities in excess of 10 years
Understand the risks associated with bond investments, including prepayment risk and how it can affect investors. Learn how to make informed investment decisions based on bond issuer's actions.
Make Your Own Quizzes and Flashcards
Convert your notes into interactive study material.
Get started for free
