Vocabulary Set 2 Now, explore the parts of the Bond Contract. Bonds, like all debt contracts outlines the terms of the borrowing agreement upfront with promised future payments. In Bonds, several key items are included in the contract. Read section 7-2 in the book (7-2 Key. Characteristics of Bonds Link) Then match the contract characteristic with its description below This term is also known as the face-value and represents A. Floating rate bond the amount of money the firm borrows and promised to B. Fixed Rate Bonds repay C. maturity date v When bonds are issued this is set at a level that will induce investors to buy the bond at or near par value D. par value (this means when the bond is introduces, this rate should E. Coupon rate be close to the market discount rate on similar bonds) In these types of bonds the coupon rate does not vary over the life of the bond. This characteristic is provided in the contract Some bonds have coupon rates that change and are often benchmarked to other market interest rates. In the past the LIBOR rates were common tools for benchmarking these bonds This is the day upon which the bond contract expires