FIN 310 CH13

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  1. Par Value
    initial value of the bond
  2. Coupon Interest Rate
    interest paid to investor
  3. Maturity
    bond expiration date
  4. Indenture
    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.
  5. Call Provision
    entitles the bond issuer to repurchase, or "call", the bonds from their holders at stated prices over specified periods.
  6. Sinking Fund
    to set aside money on a regular basis to pay off the bonds at maturity.
  7. Secured Bond
    backed by collateral (a real asset that can be seized and sold if a debtor doesn't pay off the debt)
  8. Mortgage Bond
    secured by a lien on real property
  9. Debenture
    any unsecured long-term bond
  10. Treasury Bonds
    federal government debt
  11. Agency Bonds
    bonds issued by government agencies other than the Treasury
  12. "Ginnie Mae"
    GNMA: Government National Mortgage Association, a pass-through certificate which represents an interest in a pool of federally insured mortgages
  13. TIPS
    Treasury Inflation Protected Securities: the par value changes with the consumer price index to guarantee the investor a real return
  14. Munis or Municipal Bonds
    Bonds issued by states, counties and cities, as well as other public agencies, such as school districts and highway authorities, to fund public projects
  15. Zero Coupon Bonds
    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
  16. High Yield or Junk Bonds
    Very risky, low-rated bonds, also called high-yield bonds.  Rated BB or below.
  17. Bond Ratings
    a measure of Riskiness: AAA to BBB
  18. Current Yield
    ration of the annual interest payment to the bond's market price:  (annual interest payments)/(market price of bond)
  19. Yield to Maturity
    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.
  20. Interest Rates and Bond Values have...
    an Inverse Relationship
  21. Longer Maturities change in value more than...
    shorter term bonds due to changes in Interest rates.
  22. Invoice Price =
    Bond selling price + accrued interest owed
  23. Preferred stock
    non-voting; pays dividend as high as bond interest
  24. Convertible preferred stock
    its holder can, at anytime, exchange it for a predetermined number of shares of common stock.
  25. REIT
    Real Estate Investment Trust
  26. Why buy/own stocks?
    To generate income
  27. How do you make money on Stocks?
    capital gains and dividends
  28. How often are stock dividends paid?
    every 3 months
  29. Ex-dividend date?
    How fast do you have to pay; 3 days from the trade date
  30. In bankruptcy, who stands ahead of common stock holders in claims on company assets?
    Creditors, bond holders, preferred stock
  31. Stock Splits
    increasing the number of stock shares outstanding by replacing the existing shares of stock with a given number of shares
  32. When is a company’s stock considered a “value” investment?
  33. How do you calculate dividend yield?
    made / paid
  34. How do you calculate investor return?
    dividends + what you made or lost
  35. How many companies stock prices are averaged in calculating the Dow Jones Industrial Average?
  36. Blue Chip Stocks
    Market Cap, maturity
  37. Growth Stocks
    growing earnings
  38. Equity Income Stocks
    Companies that pay you above average dividends
  39. Speculative Stocks
    less than a proven model, predicting based on supply and demand
  40. Cyclical vs. Defensive Stocks
    Cyclical is based on economic changes and Defensive is tied to the economy (consumer staples)
  41. Consumer discretionary
    something you don't have to buy
  42. Company size breaks; Large, Medium, and Small Cap or capitalization.
    • Mid: 2 bil to 10 bil
    • Large: 10 bil to infinity
    • small: less than 2 bil
  43. Technical Analysis for analyzing stock price trends
    Technical Analysis is the study of past price trends in the hope of seeing where the stock may go next.
  44. Fundamental  Stock Analysis
    Stock Fundamental Analysis mainly uses the information found in the company’s financial statements
  45. Calculate P/E ratio
    • Price / Earnings
    • investors pay high PEs b/c they expect the company to grow into it
  46. Dollar Cost Averaging
    investing a fixed amount in the asset at a fixed time repeatedly for an extended period of time
  47. DRIPs
    • (Dividend Reinvestment Plan)
    • reinvest the dividends in some firm's stock w/o brokerage fees; paid taxes; commission free
  48. BETA
    determinant of stock volatility
Card Set:
FIN 310 CH13
2015-10-26 05:47:52

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