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Chapter14 - the bondholder and the firm 4 What does the...

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Matt Serna Mr. Mckenzie Personal Finance November 21, 2010 Chapter 14 1. Why should investors consider putting bonds into their portfolio? a. Bonds reduce risk through diversification b. Bonds produce steady income c. Bonds can be a safe investment if held to maturity 2. Why are bonds considered to be safer than stocks? a. Bonds interest payments will be paid at all costs, unlike dividend payments on common stocks. 3. What is an Indenture? And why is it important? a. A legal document that provides the specific terms of the loan agreement, including a description of the bond, the rights of the bondholder, the rights of the issuing firm, and the responsibilities of the bond trustees. Its important because it protects both the trustee and
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Unformatted text preview: the bondholder and the firm 4. What does the term subordinated mean when dealing with corporate debt? a. Its simply means the support of any unsecured long term bond 5. What is the difference between direct real estate investments and indirect real estate investments? a. Direct real estate investments are places such as vacation homes, and commercial property (apartments, duplexes, and office buildings b. Indirect real estate investments are where you are part of an investment group that works directly with a professional real estate manager are better suited for the individual investor...
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