Question
Match each letter to one option. a. A type of bond that allows the bond issuer to retain the privilege of redeeming it at a
Match each letter to one option.
a. A type of bond that allows the bond issuer to retain the privilege of redeeming it at a pre-specified price at some time prior to its normal maturity date.
b.The portion of a bondholders return that results from a bonds interest payment, calculated by dividing the bonds interest payment by its market value.
c. The interest payment paid on a bond, calculated by multiplying the bonds interest rate by its face (par) value.
d. A loan, generally obtained from a bank or insurance company, on which the borrower agrees to make a series of payments consisting of interest and principal.
e. The return earned by a bondholder who purchases a bond today at its market price, assuming that the bond will be held until maturity and that all coupons and the maturity payment will be received in accordance with the indenture.
f. The name given to debt sold by a borrower in a foreign country but denominated in the currency of the country in which it is sold.
g. The term describes the 13.7% return that would be earned by a bondholder who owns a bond purchased yesterday for $875, that pays interest payments of $40 every six months, has a call price of $1,080, and could be called four years from today.
h. An example of this bond was issued by Global-Chem three years ago. It pays a 4.25% coupon and is not collateralized in the event of financial distress.
i. A bond that has been judged by credit rating agencies as having a relatively low probability of default on the payment of its interest and maturity payment.
j. A type of bond generally issued by state and local governmental entities and whose interest and maturity payments are raised and paid using income generated by the project being financed.
Options: Callable Bonds, Coupon, Current Yield, Debenture, Foreign Debt, Investment- gain bond, revenue bond, term loan, yield to call, yield to maturity.
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