Bonds Overview

Front

What are bonds?

Back

Publicly traded form of debt, known as fixed-income securities.

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Who issues bonds?

Back

Corporations, the federal government or its agencies, or state and local governments.

Front

Why are bonds called fixed-income securities?

Back

Because bondholders know both how much they will receive in interest payments and when their principal will be returned.

Front

What is a principal in terms of bonds?

Back

The face amount, or par value, of debt that must be repaid.

Front

What is an indenture agreement?

Back

A legal contract describing the bond characteristics and the bondholder and issuer rights.

Front

What are the characteristics of bonds?

Back

Maturity date, par value, coupon rate, collateral description, and steps for default.

Front

What is the maturity date of a bond?

Back

The calendar date on which the bond principal will be repaid.

Front

What is the par value of a bond?

Back

The principal loan amount that the borrower must repay, typically $1,000.

Front

What is the coupon rate?

Back

The annual amount of interest paid expressed as a percentage of the bond’s par value.

Front

What is a call feature in bonds?

Back

Allows bonds to be refinanced; issuer pays principal and a call premium when calling a bond.