Finance Chapter 6 and 7 terms and important things

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ndumas2
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104726
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Finance Chapter 6 and 7 terms and important things
Updated:
2011-09-27 18:39:44
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LSU Finance
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Terms and important things from the slides
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  1. annuity
    a level stream of cash flows for a fixed period of time
  2. annuity due
    an annuity for which the cash flows occur at the beginning of the period
  3. perpetuity
    an annuity in which the cash flows continue forever
  4. consol
    a type of perpetuity
  5. stated interest rate
    the interest rate expressed in terms of the interest payment made each period. Also known as the quoted intersted rate
  6. effective annual rate (EAR)
    the interest rate expressed as if it were compounded once per year
  7. annual percentage rate (APR)
    the interst rate charged per period mulitplied by the number of periods per year
  8. coupon
    the stated interst payment made on a bond
  9. face value
    the principal amount of a bond that is repaid at the end of the term also called par value
  10. coupon rate
    the annual couopon divided by the face value of a bond
  11. maturity
    the specified date on which the principal amount of a bond is paid
  12. yield to maturity (YTM)
    the reate required in the market on a bond
  13. current yield
    a bond's annual coupon divided by its price
  14. indenture
    the written agreement between the corporation and the lender detailing the terms of the debt issue
  15. registered form
    the form of bond issue in which the registrar of the company records ownership of each bond: payment is made directly to the owner of record
  16. bearer form
    the form of bond issue in which the bond is issued without record of the owner's name: payment is made to whomeever holds the bond
  17. debenture
    an unsecured debt, usually with a maturity of 10 years or more
  18. note
    an unsecured debt, usually with a maturity under 10 years
  19. sinking fund
    n acount managed by the bond trustee for early bond redemption
  20. call provision
    an agreeement giving the corporation and option to repurchase a bond at a specified price prior to maturity
  21. deferred call provision
    a call provision prohibiting the company from redeeming a bond prior to a certain date
  22. call-protected bond
    a bond that, during a certain period, cannot be redeemed by the issuer
  23. protective covenant
    a part of the indenture limiting certain actions that might be taken during the term of the loan, usualy to protect the lender's interest.
  24. zero coupon bond
    a bond that makes no coupon payment and is thus initually priced at a deep discount
  25. bid price
    the price a dealer is willing to pay for a security

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