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What one of these describes a bond?
A bond is a type of investment that represents a loan made by an investor to a borrower, typically the government or a corporation. Bonds have a maturity date when the borrower repays the principal amount along with interest to the investor. Bondholders receive regular interest payments until the bond reaches maturity.
What obligation does a business owner have to a investor who purchases a bond for financing?
Bonds investors are obligated whether in a corporation or government entity to provide a fixed percent rate return and a definite maturity date.
What is term bond?
A term bond is a type of bond that has a specific maturity date, at which point the principal amount is repaid to the bondholder. Unlike callable bonds, term bonds cannot be redeemed before their maturity date, providing a predictable income stream through fixed interest payments. These bonds are commonly issued by governments and corporations to raise capital for various purposes. Investors often choose term bonds for their stability and clarity regarding cash flow timing.
What happens when a yield to maturity is less than the yield to call?
The issuer will call the bonds and issue new bonds to the maturity date.
Does a maturity of a note refers to the date the note is signed?
No, the maturity of a note does not refer to the date it is signed. Instead, it refers to the date when the principal amount of the note is due to be repaid to the lender. The maturity date is typically specified in the terms of the note and can vary depending on the agreement between the parties involved.
When the corporation issuing the bonds has the right to repurchase the bonds prior to the maturity date for a specific price the bonds are?
callable bonds
What are three main characteristics of bonds?
Bonds are a form of debt securities issued by governments or corporations. They typically have a specified maturity date when the principal amount is repaid. Bonds pay periodic interest payments to bondholders based on a fixed or floating interest rate. The value of bonds can fluctuate depending on changes in interest rates and the creditworthiness of the issuer.
What is the term the face value of bonds must be repaid on the date?
The term you are referring to is "maturity." At maturity, the issuer of the bond is obligated to repay the face value, also known as the par value, to the bondholder. This is the amount that investors initially pay for the bond and is distinct from its market value, which can fluctuate over time.
What bonds can be recalled before its maturity date?
Bonds that can be recalled before their maturity date are typically known as callable bonds. These bonds allow the issuer to redeem them at a predetermined price before the maturity date, usually during a specified call period. Callable bonds often offer higher yields to compensate investors for the risk of early redemption. Other types, like putable bonds, allow investors to sell the bond back to the issuer before maturity under certain conditions.
What is the maturity on junk bonds?
Depends on the individual bond. Look for the date on the certificate.
What are easy exit bonds?
Easy exit bonds are types of fixed-income securities that can be easily sold by the investor before the maturity date. These bonds typically have high liquidity and are traded in secondary markets without significant loss of value. They provide investors with flexibility to exit their investment if needed, compared to traditional bonds that may have restrictions on early sale.
Can you provide examples of debt investments?
Debt investments are financial assets where an investor lends money to an entity in exchange for regular interest payments and the return of the principal amount at a specified maturity date. Examples of debt investments include government bonds, corporate bonds, municipal bonds, certificates of deposit (CDs), and treasury bills.
