Bond Knowledge

What is a bondholder?

• A person who invests in stocks

• An individual or institution that owns a bond issued by a borrower.

• A company that issues bonds

• A financial institution that manages bond portfolios

Who is a bondissuer?

• A professional athlete

• A chef specializing in baking

• A computer programmer

• An entity that issues bonds to raise capital.

Define bonds.

• A form of currency

• Fixed-income securities representing a loan made by an investor to a borrower (typically corporate or governmental) for a defined period at a variable or fixed interest rate.

• A type of stock

• A type of fruit

Explain government bonds.

• Government bonds are commodities traded on the stock market.

• Government bonds are equity securities issued by a government.

• Government bonds are debt securities issued by a government to raise capital.

• Government bonds are physical certificates issued by a government.

Describe corporate bonds.

• Corporate bonds are physical assets issued by corporations.

• Corporate bonds are government-issued securities.

• Corporate bonds are debt securities issued by corporations to raise capital.

• Corporate bonds are equity securities issued by corporations.

What is a coupon rate?

• The coupon rate is the price of a discount card at a store.

• The coupon rate is the speed at which coupons are processed online.

• The coupon rate is the discount percentage applied to a purchase.

• The coupon rate is the interest rate paid on a bond by its issuer.

What is a zero coupon bond?

• A zero coupon bond has a variable interest rate.

• A zero coupon bond is a type of equity security.

• A zero coupon bond pays interest annually.

• A zero coupon bond is a debt security that does not pay interest.

What is a convertible bond?

• A convertible bond is a type of bond that can be converted into a predetermined amount of the company's equity.

• A convertible bond is a type of bond that can be converted into a house

• A convertible bond is a type of bond that can be converted into a vacation

• A convertible bond is a type of bond that can be converted into a car

Explain an inflation linked bond.

• An inflation-linked bond is a type of bond that pays a fixed interest rate regardless of inflation

• The value of an inflation-linked bond decreases as inflation rises

• Inflation-linked bonds are only available to institutional investors

• An inflation-linked bond is a type of bond that is structured to provide protection against inflation. The principal value of the bond is adjusted periodically based on changes in the inflation rate, ensuring that the investor receives a return that maintains purchasing power.

Differentiate between corporate bonds and government bonds.

• Government bonds are not traded in the financial markets.

• Corporate bonds have higher risk compared to government bonds.

• Corporate bonds are issued by corporations, while government bonds are issued by governments.

• Corporate bonds are issued by individuals, while government bonds are issued by corporations.