FIN 310 CH13

initial value of the bond

interest paid to investor

bond expiration date

Legal document that provides the specific terms of the loan agreement, including a description of the bond, the rights of the bondholders, the rights of the issuing firm, and the responsibilities of the bond trustees.

entitles the bond issuer to repurchase, or "call", the bonds from their holders at stated prices over specified periods.

to set aside money on a regular basis to pay off the bonds at maturity.

backed by collateral (a real asset that can be seized and sold if a debtor doesn't pay off the debt)

secured by a lien on real property

any unsecured long-term bond

federal government debt

bonds issued by government agencies other than the Treasury

GNMA: Government National Mortgage Association, a pass-through certificate which represents an interest in a pool of federally insured mortgages

Treasury Inflation Protected Securities: the par value changes with the consumer price index to guarantee the investor a real return

Bonds issued by states, counties and cities, as well as other public agencies, such as school districts and highway authorities, to fund public projects

Bonds that don't pay interest and are sold at a deep discount from their par value; the interest is put in the principle over time until maturity

Very risky, low-rated bonds, also called high-yield bonds.  Rated BB or below.

a measure of Riskiness: AAA to BBB

ration of the annual interest payment to the bond's market price:  (annual interest payments)/(market price of bond)

The True Yield of return that the bond holder receives if a bond is held to maturity.  It's the measure of expected return for a bond.

an Inverse Relationship

shorter term bonds due to changes in Interest rates.

Bond selling price + accrued interest owed

non-voting; pays dividend as high as bond interest

its holder can, at anytime, exchange it for a predetermined number of shares of common stock.

Real Estate Investment Trust

To generate income

capital gains and dividends

every 3 months

How fast do you have to pay; 3 days from the trade date

Creditors, bond holders, preferred stock

increasing the number of stock shares outstanding by replacing the existing shares of stock with a given number of shares

P/B≤1

made / paid

dividends + what you made or lost

30

Market Cap, maturity

growing earnings

Companies that pay you above average dividends

less than a proven model, predicting based on supply and demand

Cyclical is based on economic changes and Defensive is tied to the economy (consumer staples)

something you don't have to buy

• Mid: 2 bil to 10 bil
• Large: 10 bil to infinity
• small: less than 2 bil

Technical Analysis is the study of past price trends in the hope of seeing where the stock may go next.

Stock Fundamental Analysis mainly uses the information found in the company’s financial statements

• Price / Earnings
• investors pay high PEs b/c they expect the company to grow into it

investing a fixed amount in the asset at a fixed time repeatedly for an extended period of time

• (Dividend Reinvestment Plan)
• reinvest the dividends in some firm's stock w/o brokerage fees; paid taxes; commission free

determinant of stock volatility