What is the par value (face value) of a standard corporate bond?

$1,000. This is the amount the issuer promises to repay the bondholder at maturity.

What term describes the periodic interest payment made to bondholders, expressed as a percentage of par value?

The coupon rate. It determines the annual interest payment; for example, a 6% coupon on a $1,000 bond pays $60 per year.

What is the relationship between bond prices and interest rates?

They move inversely. When interest rates rise, existing bond prices fall; when rates fall, bond prices rise.

When a bond is trading at a price above its par value, it is said to be trading at what?

A premium. This occurs when the bond's coupon rate is higher than current market interest rates.

What is a bond indenture?

A legal contract between the bond issuer and bondholders that outlines the terms of the bond, including coupon rate, maturity date, and any covenants.

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Debt Securities – SIE Exam Flashcards

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31 cards Intermediate Bond Fundamentals Yield & Pricing Corporate & Government Bonds Municipal Securities Risk & Credit Quality

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