2. Characteristics of bonds Aa Aa To be effective issuing and investing in bonds, knowledge of their terminology, characteristics, and features is essential For example: A bond's refers to the interest payment or payments paid by a bond. A bond issuer is said to be in if it does not pay the interest or the principal in accordance with the terms of the indenture agreement or if it violates one or more of the issue's restrictive covenants. The contract that describes the terms of a borrowing arrangement between a firm that sells a bond issue and the investors who purchase the bonds is called A bond's gives the issuer the right to call, or redeem, a bond at specific times and under specific conditions. Suppose you read an article about the Golden Gate Bridge and Highway District bonds. It includes the following information: Bridge Bonds Series A Dated 7-15-2005 4.375% Due 7-15-2055 @100.00 What is the coupon interest rate of this bond? 0.435% 4.375% If the price of the bond. is initially discounted and offers no coupon payments, the bo is called a Bridge Bonds Series A Dated 7-15-2005 4.375% Due 7-15-2055 @100.00 What is the coupon interest rate of this bond? 0.435% 4.375% If the price of the bond is initially discounted and offers no coupon payments, the bond is called a bond. Which feature of a bond contract allows the issuer to redeem bonds under specified terms prior to maturity? Deferred call provision Convertible provision Call provision Put provision When are issuers more likely to call an outstanding bond issue? When interest rates are higher than they were when the bonds were issued When interest rates are lower than they were when the bonds were issued