$2.$ Characteristics of bonds

To be effective issuing and investing in bonds, knowledge of their terminology, characteristics, and features is essential.

For example:

$$ A bond$$s $($Per value$-$Coupon payment$-$Yield maturity$)$ refers to the interest payment or payments paid by a bond.

$$ A bond issuer is said to be in $($Default$-$Liquidation$-$Bankrupty$)$ if it does not pay the interest or the principal in accordance with the terms of the indenture agreement or if it violates one or more of the issue$$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 depenture$-$an indeture$-$a trustee$).$

$$ A bond$$s $($Call provision$-$convertibilty provision$-$call premium$)$ allows a bondholder or preferred stockholder to convert their bond or preferred share, respectively, into a specified number or value of common shares.

Suppose you read an article about the Golden Gate Bridge and Highway District bonds. It includes the following information:

Bridge Bonds Series A Dated $7-15-20054\mathrm{.}375\%$ Due $7-15-2055$ @$100\mathrm{.}00$

What is the maturity date of this bond?

$-7-15-2055$

$-7-15-2005$

If the coupon interest rate remains constant from the time of issue until the bond matures, then the bond is called a $($folating rate$-$fixed$-$rate$)$ bond.

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 the $($a depenture$-$an indeture$-$a trustee$).$

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