Debt Characteristics
A formal agreement between the issuer of a bond and the bondholders which includes the terms and conditions of a bond.
What is an indenture?
A contract which is a borrower agrees to make a series of interest and principal payments to the lender on specific dates. This contract is usually negotiated directly between the company and borrower.
What is a term loan?
A bond that pays no annual interest but sells at discount below par.
What is a zero coupon bond?
The amount in excess of par a company must pay when it calls a security.
What is a call premium?
In the United States, most foreign stock is traded through.
What is the American depository receipts (ADRs)?
A value of debt that must be repaid at some point during the life of the debt.
What is the principal value of debt or the par value of debt?
A type of bond backed by intangible (real) assets.
What is a mortgage bond?
The two principal type of municipal bonds.
What are revenue bond and general obligation bonds?
This type of dividend is generally stated as a percentage of the par value.
What is a preferred dividend?
A protective feature on preferred stock that requires preferred dividends not paid in previous years to be disbursed before any common stock dividends can be paid.
What are cumulative dividends?
The principal value generally is written on the face, or outside cover, of the debt contract.
What is the face value of a debt?
A discounted instrument that is a type of promissory note, or "lega" IOU issued by large, financially sound firms.
What is Commercial paper?
This gives the issuing firm the right to "call in" the preferred stock for redemption under specified terms prior to maturity.
What is a call provision?
Common shareholders can gain control of the management of a company.
What is by electing board members to replace management?
Stock issued by foreign companies and traded in the United States.
What is Yankee stock?
When the market value of a debt is the same as its face value, it is said to be selling at.
What is at par (par value)?
An interest-earning time deposit at a bank or other financially intermediary.
What is a certificate of deposit?
This value is also referred to as the principal value because it is repaid at the specified date and time.
What is the maturity value?
A document giving one person the authority to act for another. Typically, this gives them the power to vote shares of common stock.
What is a proxy?
Stock traded in countries other than the home country of the company, not including the United States.
What is Euro stock?
This date represents the date on which the principal amount of a debt is due.
What is the maturity date?
Bonds issued by a state or local government.
What are municipal bonds?
Permits bondholders to exchange their investments for a fixed number of shares of common stock.
What is the conversion feature?
Stock, owned by the company's founders, that has sole voting rights but generally pays out only restricted dividends (if any) for a specified number of years.
What are founders' shares?
Stocks that generally pay little or no dividends so as to retain earnings to help fund growth opportunities.
What are growth stocks?