Question

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. • 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 allows a bondholder or preferred stockholder to convert their bond or preferred share, respectively, into a specified numbe value of common shares. 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 0 100.00 What is the issuing date of this bond? 7-15-2055 7-15-2005

Answer 1

• A bond's coupon refers to the interest payments or payments paid by a bond
  
• A bond issuer is said to be in default if it does not pay the interest or principle in accordance with the terms of the indenture agreement or if it violates one or more of the issue's restrictive convenants.
  
• A bond contract feature that requires the issuer to retire a specified portion of the bond issue each year is called a sinking fund provision.
  
• A bond's convertibility provision allows a bondholder or preferred stockholder to convert their bond or preferred share, respectively, into a specified value of common shares.
  
• The issue date of bond is 7-15-2005.
  
• 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 floating-rate bond.
  
• Call provision feature of a bond contract allows the issuer to redeem bonds under specified terms prior to maturity.
  
• Issers are more likely to call an oustanding bond issue when interest rates are lower than they were when the bond was issue.