ModuleTwoDiscussion

ModuleTwoDiscussion - maturity they may either be redeemed...

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Types of Bonds Secured and Unsecured Bonds o Secured Bonds - On secured bonds there is a type of leverage or collateral. If the bond is not repaid, the lender will seek to gain possession of the leveraged item. o Unsecured Bonds a.k.a. Debentured Bond – An unsecured bond, or debentured bond, has no collateral backing and is very RISKY. These bonds present higher interest rates. Term, Serial Bonds and Callable Bonds o Term Bonds – These bonds mature on ONE SINGLE date. o Serial Bonds – These bonds mature MULTIPLE times and in INSTALLMENTS. o Callable Bonds – These bonds offer the option to retire the bond before maturation. Convertible, Commodity-Backed, and Deep-Discount Bonds o Convertible Bonds – This type of bond can be ‘transformed’ into a type of security after a certain amount of time. o Commodity-Backed Bonds a.k.a. Asset-Linked Bonds – These bonds are redeemable in different forms of asset or product. At the time of
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Unformatted text preview: maturity, they may either be redeemed with cash or asset; whichever is more valuable at the time. o Deep-Discount Bonds a.k.a. ‘Zero-Interest Debenture Bonds’ – These bonds provide a total interest payout at maturity, which results from the zero-interest payout. ♦ Registered and Bearer (Coupon) Bonds o Registered Bonds – This type of bond belongs strictly to the person whose name appears on the bond. For there to be a transfer of ownership, the bond must be surrendered and an entire new bond issued with the new owner’s name on it. o Bearer OR Coupon Bonds – This bond belongs to whoever is in possession of the bond. ♦ Income and Revenue Bonds o Income Bonds – This type of bond earns and pays no interest unless the company who has issued it is profitable. o Revenue Bonds – This type of bond pulls interest from certain revenue accounts and sources....
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