FIN-3403 Lecture Notes - Lecture 26: United States Treasury Security, Dividend Yield, Government Bond
Document Summary
Appears as a liability on the balance sheet, creditors have no ownership rights, structured by collateral/principle and interest, legal documents, creditors can impose restrictions and force behavior in certain circumstances, lack of payment = default. Define the following terms related to bonds: indenture, par value, face value, face amount, coupon, coupon rate, security, protective covenant, seniority, sinking fund, call provision, put provision, debenture, note. Indenture the official document dedicated to the bond issue. Par value the value of the bond to be repaid at maturity. Face value the value of the bond bought at the start date. Face amount amount of issues of bond bought. Coupon periodic percentage of par value issued to bondholder as interest. Coupon rate interest rate given to bondholders based on previously agreed terms (percentage of fv) Security a piece of land or the company"s assets used as collateral towards the bondholder in the event of default.
