FP1 3.04 Vocab

Front

Bonds

Back

a piece of paper (whether real or virtual) that says the governing body or corporation will borrow your money at a particular interest rate for a particular period of time.

Front

Interest Rate / Coupon Rate

Back

The rate of interest that is earned on a bond. The cost of the Issuer borrowing your money.

Front

Face Value / Par Value

Back

The dollar value of the stated bond

Front

Maturity Date

Back

Predetermined time when you can claim your original investment

Front

Issuer

Back

The “borrower” of the invested money

Front

Yield

Back

what the bid price and the coupon rate together would (or could) bring you in interest over the time period

Front

Bond Rating

Back

a “letter score” assigned to a company based on the financial responsibility it has demonstrated

Front

Zero-coupon Bond

Back

debt security that doesn't pay interest (a coupon) but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.

Front

Common Stocks

Back

gives investors a basic share of ownership in the company as well as voting rights (usually one vote per share of stock).

Front

Preferred Stock

Back

gives stockholders a basic share of ownership in the company. Entitled to fixed dividends. No voting rights.