The Wall Street MBA by Reuben Advani

Author:Reuben Advani
Language: eng
Format: epub
Publisher: McGraw-Hill Education
Published: 2018-08-19T16:00:00+00:00

BONDS

Much of Wall Street and the US economy as a whole is driven by the debt markets. When the Federal Reserve raises interest rates, it affects every one of us in some way. The strategies that corporations employ to manage their debt can drive a company’s overall performance. Bonds, or what generally are referred to as secured debts, have a number of distinguishing features. Here is a brief explanation of each one:

Amount (of issue): how much was raised from the offering

Date (of issue): the day of sale

Maturity: when the principal will be repaid

Face value: denomination of the bond

Offer price: the percentage of the face value

Coupon: the percentage of interest paid to bondholders (usually stated in annual terms)

Coupon payment dates: dates of interest payments

Call provision: whether the company retains the right to repay the bond before maturity

Call price: if there is a call provision, the price at which the company can buy the bond back (usually above the bond’s value, thus offering a premium for early repayment)

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