To be effective issuing and investing in bonds, knowledge of their terminology, characteristics, and features is essential For example: A bond's bond's first purchaser. is generally $1,000 and represents the amount borrowed from the 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 bond's gives the issuer the right to call, or redeem, a bond at specific times and under specific conditions. Bridge Bonds Series A Dated 7-15-2005 4,375% Due 7-15-2055 @100.00 What is the coupon interest rate of this bond? O 0.435% 4.375% If the coupon interest rate is 4.375% for the first six months and changes to a rate equal to the 10-year Treasury bond rate plus 1.3% thereafter, the bond is called a bond 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 the When are issuers more likely to call an outstanding bond issue? 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