Rudy Tools 5 Tips s Tips Ch 07: Assignment - Bonds and Their Valuation 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 refers to the interest payment or payments paid by a bond. 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 gives the issuer the right to call, or redeem, a bond at specific times and under specific conditions. 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 What is the maturity date of this bond? 7-15-2005 7-15-2055 upon payments, the bond is called a bond. X A-Z WIN N S d dy Tools Tips Tips What is the maturity date of this bond? 7-15-2005 7-15-2055 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? Sinking fund provision Convertible provision Deferred call provision Call provision 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 Grade It Now bond. Save & Continue Continue without saving