Types of Bonds Flashcards Preview

SIE Exam > Types of Bonds > Flashcards

Flashcards in Types of Bonds Deck (184)
Loading flashcards...
1

An unsecured corporate bond

Debenture

2

Most senior form of corporate bond

Secured

3

Three examples of secured corporate bonds

Equipment trust certificates, mortgage bonds, collateral trust bonds

4

Agency debt that is backed in full by the U.S. government

Ginnie Mae

5

Considered the safest form of debt issued in the U.S.

U.S. Government bonds, notes and bills

6

Taxable at the federal level; may be exempt from taxation at the state level

U.S. Government bonds and notes

7

Corporate debt instruments with a maturity of no more than 270 days

Commercial paper

8

Maximum maturity of commercial paper

270 days

9

Bonds backed only by the good faith of the issuing corporation

Unsecured bonds or debentures

10

Protects bondholder through a written agreement between issuer and trustee

Trust Indenture

11

Typically backed by real estate holding of a corporation

Mortgage bond

12

Typically secured by other securities owned by the corporation

Collateral Trust bond

13

Secured by physical assets owned by the company

Equipment trust certificates

14

Allow for the exchange of debt for equity issued by the same corporation

Convertible debt

15

The stated number of common shares a bondholder receives upon conversion

Conversion ratio

16

The point at which there is neither profit or loss in a conversion

Conversion parity

17

The amount of interest paid prior to maturity on a Treasury Bill

None, T-Bills are zero coupon securities

18

U.S. Government instrument that matures in 1 year or less

Treasury Bill

19

U.S. Government instrument that is quoted on an annualized discounted yield basis

Treasury Bill

20

U.S. Government instruments that matures within 2 -10 years

Treasury Note

21

U.S. Government instruments that typically mature in 20 - 30 years

Treasury Bonds

22

U.S. government instruments that are quoted in 32nds

Treasury Notes and Treasury Bonds

23

Inflation-indexed bonds issued by the U.S. Treasury

TIPS

24

U.S. government zero-coupon bond instrument that has no reinvestment risk

STRIP

25

Three government entities that issue mortgage-backed securities

Ginnie Mae, Fannie Mae and Freddie Mac

26

Investment risk most associated with mortgage-backed securities

Prepayment risk

27

Investment risk that coincides with early payment of a mortgage-backed securities

Reinvestment risk

28

Distinct maturity categories of CMOs

Tranches

29

Frequency of interest payments on mortgage-backed securities

Monthly

30

Mortgage-backed securities with the implied backing of the U.S. government

Fannie Mae and Freddie Mac