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Bond. A debt sold by a company or government to
raise money. One who buys a bond is a creditor of the company, but not an owner,
as a stockholder would be.
Indenture of trust. The legal document that details
the terms of a bond, as well as the buyer's rights and responsibilities.
Basis point. A measure of differences between
yields or interest rates. The unit is one one-hundredth of one percent (0.01).
For example, if a bond begins with a yield of 5.50 percent and the yield
increases over time to 5.62 percent, the increase is 12 basis points.
Indenture. The agreement that spells out the terms
of a loan. This includes the principal, interest rate, maturity date and the
rights and duties of the buyers.
Short-term. In bond maturities, one to five
years.
Intermediate-term. In bond maturities, five to ten
years.
Long-term. In bond maturities, more than ten
years.
Legal opinion. In relation to bonds, a legal
opinion is a statement declaring that a bond issue was authorized and issued.
Included in the opinion is any tax-exempt status of the bonds.
Par. The value of a bond assigned by the issuer;
also called face value.
Original issue discount. A bond with an offering
price that is below par value.
Full faith and credit. The commitment to repay a
debt backed by the creditworthiness of a bond issuer.
Coupon. A bond's interest rate. |
