FI 393 Study Guide - Final Guide: Premium Bond
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The following describes a(n)_____________: these are issued by the federal government, the payment of interest and repayment of principal amount is guaranteed by the government, the default risk premiums for these are zero. __________________ are issued by different corporations. these bonds are exposed to default risk. __________________ are bonds on which interest rate is not fixed but tied to some market rate called a benchmark. The coupon payment on floating rate bonds are approximately equal to the current market rate. ___________________ pay no coupons at all, but are offered at a substantial discount below their par values and hence provide capital appreciation rather than interest income. Any bond originally offered at a price significantly below its par value is called a(n)_____________. A(n)_______________ gives the issuing corporation the right to redeem bonds prior to the maturity under specified terms, usually at a price greater than the maturity value (the difference between them is called the call premium).