Business Finance Chapter 7 Vocabulary

a certificate representing a promise to pay a definite amount of money at a stated interest rate on a specified maturity date (due date)

• Yield to maturity
• Bond rating
• Bond
• Commercial paper

a measure of the quality and safety of a company’s debt

• Bond rating
• Bond
• Creditor
• Capital gain

the increase in the value between the purchase price and the maturity value

• Stock exchange
• Capital gain
• Bond
• Commercial paper

unsecured, short-term debt instruments issued by corporations

• Bond rating
• Capital gain
• Coupon rate
• Commercial paper

an equity security representing ownership in a corporation with voting rights

• Common stock
• Creditor
• Bond
• Coupon rate

the stated annual interest rate for a bond

• Common stock
• Dividend
• Coupon rate
• Debenture bond

a person who buys a bond, thus lending money to the organization

• Yield to maturity
• Common stock
• Creditor
• Debenture bond

a corporate bond without collateral

• Dividend
• Initial public offering (IPO)
• Creditor
• Debenture bond

a portion of company profits

• Dividend
• Investment banker
• Coupon rate
• Leasing

when a company offers stock to outside investors for the first time

• Initial public offering (IPO)
• Capital gain
• Investment banker
• Commercial paper