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1. 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 maturity date. 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. . A bond contract feature that requires the issuer to retire a specified portion of the bond issue each year is called a . A band's allows a bondholder or preferred stockholder to convert their bond or preferred share, respectively, into a specified number or value of common shares. refers to its face value and the amount of money that the issuing entity borrows and promises to repay on the 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 of this hand? What is the coupon interest rate of this bond? O 0.435% O 4.375% If the price of the bond is initially discounted and offers no coupon payments, the bond is called a Which feature of a bond contract allows the issuer to redeem a bond issue immediately in its entirety at an amount greater than par value prior to maturity? Convertible provision Sinking fund provision Deferred call provision Call provision bond. Issuers can gradually reduce the outstanding balance of a bond issue by using a sinking fund account into which they deposit a specified amount of money each year. To operationalize the sinking fund provision of an indenture, issuers can (1) purchase a portion of the debt in the open market or (2) call the bonds if they contain a call provision. Under what circumstances would a firm be more likely to buy the required number of bonds in the open market as opposed to using one of the other procedures? Under what circumstances would a firm be more likely to buy the required number of bonds in the open market as opposed to using one of the other procedures? O When Interest rates are lower than they were when the bonds were issued When interest rates are higher than they were when the bonds were issued