Management and Organizational Studies 2277A/B Lecture Notes - Lecture 5: Premium Bond, Credit Risk, Callable Bond

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 2277A/B
• Professor: Barry Hawn

Document Summary

Bonds: long term debt securities issued by government agencies or corporations that are collateralized by assets. Debentures: similar to bonds, except that these long term securities issued by corporations are secured only by the corporation"s promise to pay. Par value: of a bond is its face value, or the amount returned to the investor at the maturity date when the bond is due. A bond"s market price, which is its selling price is generally expressed as a percentage of the bond"s par value. The coupon interest rate on a bond represents the annual rate of interest to be paid out on a bond calculated as a percentage of the par value. Term to maturity: refer to the date at which a bond will expire and the par calue of the bond, along with any remaining coupon payments is to be paid back to the bond holder.