CDAE 158 Lecture Notes - Lecture 19: Corporate Bond, Debenture, Sinking Fund
8 Nov 2018
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Document Summary
Corporate bond a corporation"s written pledge to repay a specified amount of money with interest. Face value the dollar amount that the bondholder will receive at the bond"s maturity date, usually ,000. Bondholders receive interest payments usually every six months at the stated interest rate. The legal conditions are described in a bond indenture . Is a financially independent firm that acts as the bondholders representative. Unsecured: backed only by the reputation of the issuing corporation. A corporate bond that is secured by various assets of the issuing firm, usually real estate. A bond that pays a higher rate of interest but has a higher rate of risk of default. Call feature corporations call in, or buy back, outstanding bonds from current bondholders before the maturity date. Most agree not to call bonds for the first 5 to 10 years after they are issued.
