5. Characteristics of bonds Aa Aa E To be effective issuing and investing in bonds, knowledge of their terminology, characteristics, and features is essential For example: is generally $1,000 and represents the amount borrowed from the A bond's bond's first purchaser. 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 allows a bondholder or preferred stockholder to convert their bond or preferred share, respectively, into a specified number or value of common shares