Term
| Types of borrowers in the bond market |
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Definition
- Corporations
- Governments
- Agencies (Fannie or Freddie Mac)
- Municipalities
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Term
| Why do Corporations issue debt? |
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Definition
To raise capital
One other one that is onthe slides |
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Term
How does the fixed income market differ from the equity market? |
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Definition
· Fixed Income is traded OTC
· The bond market doesn’t have a lot of transparency (hence the Bloomberg) trades are dealer to dealer
· Huge difference in Size, there are a large number of bonds available, only one security to consider
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Term
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Definition
· Holder lends money to the company with the promise to be repaid w interest
· OTC – Traded between brokers and dealers therefore less transparency
· Companies can issue multiple bonds
· Loan plus interest is paid to investors first
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Term
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Definition
| The market where an investment bank first sells newly issued securities to investors on behalf of a corporation |
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Term
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Definition
| person who buys a bond from someone who already owns it not directly from the company |
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Term
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Definition
| the process by which investment banks raise investment capital from investors on behalf of corporations and governments that are issuing securities. |
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Term
| Where does a price come from? |
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Definition
| Different dealers contribute the prices to Bloomberg, it is the present value of future cash flows. |
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Term
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Definition
· Institution or borrower of the loan
· The issuer is required to repay the lender
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Term
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Definition
| The lender or buyer of the debt |
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Term
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Definition
· Date on which the loan must be repaid by the issuer
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Term
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Definition
· Dollar amount that is loaned to the issuer and must be repaid at maturity
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Term
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Definition
· Annual Interest amount paid by the issuer to the lender in order to entice the lender to purchase
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Term
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Definition
the amount of return an investor will realize on a bond. Returns are based on all future cashflows |
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Term
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Definition
| A bond that cannot be redeemed prior to maturity |
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