Shared Flashcard Set

Details

Ch 13 - Investing in Bonds
vocab
13
Finance
Undergraduate 1
11/20/2011

Additional Finance Flashcards

 


 

Cards

Term
face value
Definition
is the amount the bond pays at maturity. it is usually the amount the investor pays for a newly issued bond, but may not be the price an investor pays on the open market
Term
maturity
Definition
is when a bond reaches the end of its financial life and the face value or principal is returned to the owner. bonds may have ___ of just a few years or may stretch out for many years
Term
inflation
Definition
is a rise in the cost of goods and services with a corresponding decrease in the value of money
Term
redeem
Definition
in bond parlance, means for the issuer to pay the owner the full face value of the bond. bonds are usually ___ at maturity, but can be ____ earlier through a call provision
Term
Consumer Price Index
Definition
is a basket of goods and services tracked by the Bureau of Labor Statistics for the relative price change from month to month. this change is the rate of inflation
Term
deflation
Definition
is a marked decline in the prices of gods and services, usually accompanied by high unemployment and a drop in the output of a nation's economy
Term
Treasury Direct
Definition
is the Treasury Department's sales arm. they system allows investors to buy treasury issues directly from the government without going through a broker
Term
Consumer Price Index for Urban Consumers
Definition
is a variation of the consumer price index that focuses in on those items that urban dwellers would buy to measure how inflation affects them
Term
secure bonds
Definition
are issued by corporations and are tied to a physical asset such as real estate or equipment. these bonds typically are more secure because of the collateral of the asset linked to the bond
Term
debentures
Definition
are unsecured bonds offered on the credit of the corporation. with a well-known, established company, this may not be a risky bond, but these are very risky investments with less financially secure companies, because they are unsecured by any corporate asset
Term
net asset value
Definition
is the daily value of a mutual fund that includes all the assets minus the fund's liabilities converted to a per share price. this is the price at which you buy and sell mutual fund shares if you deal directly with the company
Term
coupon
Definition
comes from the bond markets where years ago bond investors had to clip ___ off the actual paper bond and send them in to receive their interest payment. thus, the term "___ chippers" was given to bond investors
Term
buy-and-hold
Definition
investing is a strategy that says investor success is a result of identifying quality investments and holding them rather than actively trading in and out of the market
Supporting users have an ad free experience!