Saved tice Homework QS 10-12 Bond features and terminology LO A2 Select the phra

Question

Saved tice Homework QS 10-12 Bond features and terminology LO A2 Select the phrase that best fits each term of the description A through H. Description Items ed A Records and tracks the bondholders names B Is unsecured, backed only by the issuer's credit standing C Has varying maturity dates for amounts owed ences D Iidenidies rights and responsbilties of the issuer and the bondholders E Can be exchanged for shares of the issuer's stock F Is unregistered, interest is paid to whoever possesses them G Maintains a separate assot account from which bondholders are paid at maturity H Pledges specific assets of the issuer as collateral Reference links

Explanation / Answer

A. Records and tracks the bondholders' names - Registered Bond

(Registered Bond: A registered bond is a bond which is registered with the Issuer of the bond. The details of the owner of a bond are recorded in a register of the company. This register allows the issuer to pay coupon payment by tracking eligible person)

B. Is unsecured; backed only by the issuer's credit standing – Debenture

(Debenture: It is an unsecured debt instrument and backed only by the credit worthiness and reputation of the issuer)

C. Has varying maturity dates for amounts owed – Serial Bond

(Serial Bond: It is a bond in which portion of the outstanding bond amount gets matured in a regular periodical intervals)

D. Identifies rights and responsibilities of the issuer and the bondholders – Bond Indenture

(Bond Indenture: It is a contract between Issuer of the bond and the holder of the bond, contains terms and conditions applicable to the bond)

E. Can be exchanged for shares of the issuer's stock – Convertible Bond

(Convertible Bonds: It is a bond which can be converted into a predetermined number of shares of common stock in the issuing company at certain times during the life of the bond)

F. Is unregistered; interest is paid to whoever possesses them – Bearer Bond

(Bearer Bond: It is a bearer instrument contains interest coupons, which allows the holder of the bond to claim the interest amount by submitting the coupons on maturity date, irrespective of the fact that such holder of the bond is registered or not)

G. Maintains a separate asset account from which bondholders are paid at maturity – Bond Sinking Fund

(Bond Sinking fund: In this a portion of the revenue will be set aside for repayment of outstanding bond amount on maturity date)

H. Pledges specific assets of the issuer as collateral – Secured Bond

(Secured Bond: It is secured by the pledge of the issuer’s specified assets in the form of collateral. In the event of default, the ownership of the asset will be transferred to the Bond holders)

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