Chapter 13

MONEY CASH DOLLARS BUCKS MOOLAH GREENBACKS

Face Value – the dollar amount that the bond holder will receive when the bond matures Maturity Date – the date when a bond will be repaid

Debenture – backed only by the reputation of the issuing corporation Mortgage Bond – also known as a secured bond because it is backed by corporate assets Subordinated Bond – the bond holder only collects after all other bondholders have been paid Convertible Bond – bondholder can trade the bond for shares of common stock

Callable – allows the corporation to buy the bond back before the maturity date. Premiums – a bonus above the face value of the bond paid by the corporation for paying the bond off early. Sinking Fund – a fund established by the company to make deposits for the purpose of repaying bond holders Serial Bonds – the bonds mature at different dates

Registered Bonds – listed in the name of the investor to guarantee that only the purchaser of the bond can collect. Coupon Bond – a registered bond for the face value. Interest is paid with detachable coupons. Bearer Bond – whoever holds the bond may cash it in. Zero Coupon Bond – No interest payments, the bondholder is paid by purchasing the bond at less than face value

Treasury Bills (T-Bills) - sold in units of $1,000 at a discount with maturity in 4 weeks, 13 weeks, 26 weeks or 52 weeks Treasury Notes – issued in $1,000 units with a maturity of one and ten years. Series EE Savings Bonds – issued at one-half of its face value. Interest is paid for up to 30 years Series I Savings Bond – Indexed for inflation Agency Bonds – bonds issued by agencies other than the Treasury

Treasury Bills (T-Bills) - sold in units of $1,000 at a discount with maturity in 4 weeks, 13 weeks, 26 weeks or 52 weeks Treasury Notes – issued in $1,000 units with a maturity of one and ten years. Series EE Savings Bonds – issued at one-half of its face value. Interest is paid for up to 30 years Series I Savings Bond – Indexed for inflation Agency Bonds – bonds issued by agencies other than the Treasury Department

Municipal Bonds – General obligation bond – backed by full faith and credit of the issuing government – Revenue Bond – back by the expected revenue of the project financed

High Grade AAA or AA Medium Grade A or BBB Speculative BB or B Default CCC, CC, C or D Bonds with less than a BBB rating are considered

Professional Management Diversification Easy to get started Low initial investment

TYPES OF MUTUAL FUNDS CLOSED-END FUNDS Once the initial shares are sold, an investor wishing to invest must purchase shares in the secondary market OPEN-END FUNDS Unlimited number of shares that are issued and redeemed by an investment company

Load Funds A commission is charged when shares are purchased No-Load Funds No commission is charged