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Instructions: Fill in the blanks with the appropriate terms. Terms are provided on the next page. 1. Long term corporate debt is usually in the form of a bond that has a principal or face value of Annual interest on bonds is specified as a equal to a percentage of Principal, along with the last interest payment, is repaid to the bondholder on a specified date, called the 2. If a bond is a the company's registrar mails the interest payment to the owner of record. bonds have dated coupons attached; every six months, the bondholder detaches a coupon and mails it to the firm which then makes the interest payment to the bondholder. The ownership of a bond is not recorded with the company. 3. governs priority of payment to creditors in the event of bankruptcy. Some i.e. other creditors must be repaid first. debt is 4. A provision allows the firm to repurchase the entire debt issue before maturity. The call price equals the of the bond plus a Often, bonds cannot be called for several years; this is a call, and the bonds are during this period. 5. A actions. A restricts actions of the issuer. A disallows certain requires that certain actions be taken by the corporation. 6. Bonds are rated according to the likelihood of and the protection afforded the bondholders in the event of High ratings indicate probability of default. 7. bonds have no default risk. bonds are exempt from federal income taxation. bonds make no coupon payments, and are initially priced at a deep discount from par. bonds have adjustable coupon payments, which are tied to a specified index. The coupon payment of bonds are paid only if the firm's income is sufficient to do so. A bond can be swapped for a fixed number of shares of stock. 8. Most bond trading takes place Terms: Bearer (used 2 times) Call Call-protected Convertible Coupon interest rate Default (used 2 times) Deferred Face value (used 2 times) Floating-rate Income Low Maturity date Municipal Negative covenant Over the counter Positive covenant Premium Protective covenant Registered Seniority Subordinated Treasury Zero-coupon $1,000