BU111 Study Guide - Final Guide: Savings Account, Market Trend, Canada Savings Bond
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BU111 Full Course Notes
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Document Summary
When you buy canada savings bond, you"re lending the gov. money. When company issues bonds, it agrees to repay debt (principal) at maturity date. Value of principal to be repaid is face/par value (usually denominations) In x number of years, they"ll pay you x amount back (your loan to them) In meantime, they"ll pay you interest of xx% (coupon payment of bond) Annual interest is fixed rate of return (doesn"t change) Maturity date: date that company is supposed to pay you back; interest payment stops then. Priority over stockholders: if business goes bankrupt, bondholders are ahead of stockholders to get repayment of money and liquidation. Debentures are unsecured (no mortgages or assets backed) Registered bond: holder names are registered with company. Bearer bond: bearer of bond can cash anonymously. Bondholders clip coupons from certificates and send them to issuer (company) to receive payment on maturity date.
